Comprehensive Annual Financial Report Pima County, Arizona 2008 For the Fiscal Year Ended June 30, 2008 Comprehensive Annual Financial Report Pima County, Arizona PIMA COUNTY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2008 BOARD OF SUPERVISORS Richard Elías Chair District #5 Ramón Valadez Vice Chair District #2 Ann Day District #1 Sharon Bronson District #3 Ray Carroll District #4 COUNTY ADMINISTRATOR C. H. Huckelberry Prepared by the Pima County Department of Finance and Risk Management Tom Burke, Director Ellen Moulton, Deputy Director Paul Guerrero, CPA, Division Manager Financial Control & Reporting Accountants Willie Ames Claire Bice Brenda DeBoo-Nicely Dana Dmitroff Toni Dunn Emilia Eveningred Mary Fellows Chuo Holliday Linda House Marilyn Hutzler Patrick McGee, CPA Janys Neill Grace Ochotorena Janet Peete Rosemarie Perry Pete Rodriguez Blanca Rossetti Phil Schroeck Jennifer Serrano Kathy Talcott PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2008 TABLE OF CONTENTS Exhibit I. INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart 1-6 7 8 II. FINANCIAL SECTION Independent Auditors' Report A. B. Page 9 - 11 MANAGEMENT'S DISCUSSION AND ANALYSIS (required supplementary information) 13 - 29 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets Statement of Activities Governmental Fund Financial Statements (Major and Other) Balance Sheet - Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities A-1 A-2 31 32 - 33 A-3 34 A-4 35 A-5 36 A-6 37 Proprietary Fund Financial Statements (Major and Other) Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds A-7 38 A-8 A-9 39 40 - 41 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets - Fiduciary Funds Statement of Changes in Fiduciary Net Assets - Fiduciary Funds A-10 A-11 42 43 Table of Contents (continued) Exhibit Notes to Financial Statements Note 1: Summary of significant accounting policies Note 2: Net asset beginning balances restated Note 3: Cash and investments Note 4: Due from other governments Note 5: Capital assets Note 6: Claims, judgments and risk magagement Note 7: Long-term liabilities Note 8: Short-term debt Note 9: Landfill liabilities Note 10: Pensions and other postemployment benefits Note 11: Interfund transactions Note 12: Stewardship, compliance, and accountability (deficit fund balances) Note 13: Construction and other significant commitments Note 14: Subsequent event C. 44 - 50 50 51 - 54 55 56 - 57 58 - 59 60 - 68 69 69 - 70 70 - 75 76 77 77 78 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT'S DISCUSSION AND ANALYSIS Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund B-1 Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund Schedule of Retirement Plans' Funding Progress 79 80 B-2 Note to the Schedule of Retirement Plans' Funding Progress D. Page 81 82 COMBINING STATEMENTS AND OTHER SCHEDULES Other (Nonmajor) Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds C-1 84 - 85 C-2 86 - 87 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Other Governmental Funds Capital Projects Fund Transportation - Special Revenue Fund Health and Animal Control - Special Revenue Fund Regional Flood Control District - Special Revenue Fund Employment and Training - Special Revenue Fund Other - Special Revenue Fund Other Grants - Special Revenue Fund School Reserve - Special Revenue Fund Environmental Quality - Special Revenue Fund Special Districts - Special Revenue Fund Solid Waste - Special Revenue Fund Library District - Special Revenue Fund Stadium District - Special Revenue Fund Debt Service Fund C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 C-13 C-14 C-15 C-16 89 90 91 92 93 94 95 96 97 98 99 100 101 102 Table of Contents (continued) Other (Nonmajor) Enterprise Funds Combining Statement of Net Assets - Nonmajor Enterprise Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Nonmajor Enterprise Funds Combining Statement of Cash Flows - Nonmajor Enterprise Funds Internal Service Funds Combining Statement of Net Assets - Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds Combining Statement of Cash Flows - Internal Service Funds Fiduciary Funds Combining Statement of Fiduciary Net Assets - Investment Trust Funds Combining Statement of Changes in Fiduciary Net Assets Investment Trust Funds Combining Statement of Fiduciary Net Assets - Agency Funds Combining Statement of Changes in Fiduciary Net Assets - Agency Funds III. STATISTICAL SECTION Financial Trends Information Net assets by component Changes in net assets Fund balances - governmental funds Changes in fund balances - governmental funds Revenue Capacity Information Taxable assessed value and estimated actual value of property Direct and overlapping property tax rates Direct and overlapping property tax rates - school districts Principal property taxpayers Real property tax levies and collections Assessed, limited and full cash (secondary) value of taxable property Comparative net valuations and tax rates Historical collections - hotel excise tax, car rental surcharges and recreational vehicle tax Streets and highways revenues Exhibit Page C-17 103 C-18 C-19 104 105 - 106 C-20 107 C-21 C-22 108 109 - 110 C-23 111 C-24 C-25 112 113 C-26 114 D-1 through 4 115 - 119 D-5 through 12 121 -132 Table of Contents (continued) Exhibit Page Debt Capacity Information Ratios of outstanding debt by type to personal income and per capita Ratio of net general bonded debt to assessed value and net bonded debt per capita Ratio of direct and overlapping debt to property values and per capita Computation of direct and overlapping governmental activities debt outstanding Legal debt margin Regional Wastewater Reclamation Department pledged sewer revenue debt coverage Pledged revenue bond coverage - transportation revenue bonds Pledged revenue bond coverage - lease revenue bonds Lease, lease-purchase and purchase agreements Ratio of annual debt service expenditures for general bonded debt to total general expenditures D-13 through 19 133 - 142 Demographic and Economic Information Demographic and economic statistics Principal employers Population and employment Transportation and real estate Economic indicators by calendar year Population statistics Average annual jail population D-20 through 26 143 - 150 Operating Information Employees by function Operating indicators by program Capital assets and infrastructure by program D-27 through 29 151 - 153 Comprehensive Comprehensive Annual Annual Financial Financial Report Report For For the the Fiscal Fiscal Year Year Ended Ended June June 30, 30, 2008 2007 INTRODUCTORY SECTION SECTION INTRODUCTORY Letter of of Transmittal Transmittal Letter Certificate of of Achievement Achievement for for Excellence Excellence in in Financial Financial Reporting Reporting Certificate Organizational Chart Chart Organizational FINANCIAL SECTION SECTION FINANCIAL STATISTICAL SECTION SECTION STATISTICAL ).42/$5#4)/. PIMA COUNTY COUNTY PIMA INTRODUCTORY SECTION The purpose of the Introductory Section in a comprehensive annual financial report (CAFR) is to familiarize readers with the organizational structure of the government, the nature and scope of the services it provides and the specifics of its legal operating environment. The Honorable Board of Supervisors Pima County, Arizona We are pleased to submit, in accordance with state statutes, the Comprehensive Annual Financial Report (CAFR) of Pima County, prepared by the Finance and Risk Management Department, for the fiscal year ended June 30, 2008. This report presents comprehensive financial and operating information about the County’s activities for the fiscal year that is useful to its property owners, businesses and other resource providers. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the County. This report is prepared in accordance with generally accepted accounting principles (GAAP) and in conformance with standards of financial reporting as established by the Governmental Accounting Standards Board (GASB) using the guidelines as recommended by the Government Finance Officers Association of the United States and Canada (GFOA). GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the independent auditors’ report. We believe that the financial information, as presented, is accurate in all material aspects; that it is presented in a manner designed to openly disclose the financial position and results of operations of the County as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain the maximum understanding of the County’s financial affairs have been included. The CAFR consists of three sections: • The INTRODUCTORY section, which familiarizes the reader with the organizational structure of the County, the nature and scope of the services it provides, and the specifics of its legal operating environment. • The FINANCIAL section, which includes the independent auditor’s report, MD&A, audited basic financial statements, notes to the statements, and required supplementary information necessary to fairly present the financial position and results of operations of the County in conformity with generally accepted accounting principles. This section also includes supporting statements and schedules necessary to produce a CAFR. • The STATISTICAL section, which contains comprehensive statistical data on the County’s financial, physical, economic and demographic characteristics. Pima County and County Services Pima County is situated in the southern part of Arizona with a portion of its southern boundary bordering Mexico. The County was organized in 1864 under the Arizona Territorial Legislature as one of the State’s four original counties. A five-member Board of Supervisors is responsible for implementing the County’s governmental and administrative affairs. Each member of the Board is elected from a designated district to serve a four-year term. The Chair is selected by the Board from among its members. The Board is also responsible for establishing the policies of the County, which provide guidance to the various County constitutional officers and departments. The Board appoints a County Administrator who is responsible for the general administrative and overall operations of the various departments of the County. Pima County includes in its financial statements all funds, agencies, boards, commissions and authorities for which the Pima County Board of Supervisors is financially accountable. As the primary government, Pima County is financially accountable if it appoints a voting majority of an organization’s governing body and either: 1) it is able to impose its will on that organization; or 2) a potential exists for that organization to provide specific benefits to, or impose specific financial burdens on, the primary government. Additionally, the primary government may be financially accountable if an organization is fiscally dependent on the primary government. Pima County offers a wide variety of governmental services, including: • Justice and Law Enforcement: Clerk of the Superior Court, Constables, County Attorney, Superior Court, Juvenile Court, Justice Court, Sheriff’s Department, Indigent Defense and Public Fiduciary • Medical Services: Pima Health System & Services (including Posada del Sol), Institutional Health, Public Health (including Animal Control) and Forensic Science Center • Community and Economic Developments: Superintendent of Schools, Community Development and Neighborhood Conservation, Economic Development and Tourism, Community Services, Employment and Training, Community Resources, County Free Library District, Southwestern Fair Commission and Stadium District • Public Works: Regional Flood Control District, Development Services (including Planning & Zoning), Transportation, Regional Wastewater Reclamation, Solid Waste, Environmental Quality, Capital Improvement Program, Fleet Services, Natural Resources, and Parks & Recreation • County Administration: Board of Supervisors, County Administrator, Assessor, Clerk of the Board, Elections, Finance and Risk Management, Human Resources, Information Technology, Procurement, Recorder, Treasurer, Facilities Management, Communications, Parking Garages and Graphics Services 2 Pima County is also responsible for reporting the financial activities of its component units. These units are either discretely presented or blended. Although they are separate legal entities, blended component units are substantially a part of the County’s financial activities and are combined with data for the County. Blended and discrete component units include: • Southwestern Fair Commission. Activities of the Commission are reported as a discrete component unit of the County in the accompanying financial statements. • Pima County Stadium District, Regional Flood Control District, and Library District. Activities are reported in special revenue funds as blended component units in the accompanying financial statements. • Special Districts. Pima County includes the financial activities of various improvement districts in its financial statements. Improvement districts are established to pay for the construction or maintenance of specific public works projects that benefit citizens of a limited geographical area. The County’s currently active improvement districts include La Cholla Boulevard, Hayhook Ranch Road and Camino Ojo De Agua Improvement Districts. The County also has various independently governed school, irrigation, fire, and street lighting districts, and a health district. In addition, there are other entities for which the County is not financially accountable. These entities include the Industrial Development Authority, Pima Association of Governments, Pima Council on Aging and the Workforce Investment Board. The financial statements of such districts and entities are not included in the accompanying financial statements except to reflect amounts held in a fiduciary capacity by the County Treasurer. Economic Outlook Overall, the slowing of the economy and reduction in housing activity is having a pervasive, negative impact on the State and the County. The Management’s Discussion and Analysis on page 13 – 29 provides for a general and specific discussion regarding the County’s economic outlook Expenditure Limitation Arizona voters approved a proposition amending the state constitution in 1980 that established expenditure limitations for local governments, including Pima County. While the County has not exceeded the limitation, the rapid growth of expenses from the County’s sewer and conveyance system is significantly impacting expenditures subject to the limitation. Major Program Initiatives and Developments Some of the major developments that occurred in Pima County during the fiscal year ended June 30, 2008 include: Capital Improvement Program Bond sales occurred in February 2008 for both General Obligation and Transportation Revenue Bonds, with Sewer Revenue bonds and Certificates of Participation sold in May. General Obligation, Transportation Revenue and Sewer Revenue bonds continue to fund a significant portion of the Capital Improvement Program. Bond sales are currently planned for the first quarter of calendar year 2009. 3 Several ongoing projects were completed in the fiscal year, primarily consisting of roadway projects, land acquisitions, libraries, and improvements to the sewage conveyance system within the County. Significant completed roadway projects include Valencia from Mark Road to Camino de la Tierra, and Craycroft Road from River to Sunrise. Completed library projects include the Marana library and the Flowing Wells library. Significant land acquisitions include the Gerald Brown properties with major sewage improvement projects completed at the Federal Bureau of Prisons and the Corona de Tucson expansion. Major bond-funded projects still underway include the Psychiatric Hospital and Urgent Care facility located at the Kino campus, and the Regional Public Safety Communication System. Please refer to the Management's Discussion and Analysis beginning on page 13 for details on these and other significant projects. Financial Information Accounting System and Budgetary Control In developing and evaluating the County’s accounting system, consideration is given to the adequacy of internal control procedures. Internal controls for accounting purposes are designed to provide reasonable, but not absolute, assurance regarding: (1) safeguarding of assets against loss from unauthorized use or disposition, and (2) reliability of financial records for preparing financial statements and maintaining accountability of assets. The concept of reasonable assurance recognizes that: (1) costs of implementing controls should not exceed their likely derived benefits, and (2) evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that the County’s internal control structure adequately safeguards assets and provides reasonable assurance of proper recording of financial transactions. Budgetary control is maintained at the elected official or department level, with each department budgeted on a cost center/account line item basis. Each year, the budget is presented emphasizing the programmatic components of County services, identifying the costs and funding of programs. Cash Management Most cash, other than imprest accounts, is on deposit with the County Treasurer or the State Treasurer. Amounts temporarily available during the course of the fiscal year are invested by the County Treasurer according to statutory guidelines. To address cash flow needs in the short term, the County maintains a revolving line-of-credit with Bank of America, N.A. For short term needs within the County, the County has instituted internal borrowings among funds that were recorded in its accounting records. 4 Risk Management Pima County has established a Self Insurance Trust Fund to account for the risk management function of the County. The Fund is administered by an appointed Board of Trustees and provides self-insured coverage to the County for medical malpractice, workers’ compensation, unemployment, general liability, property damage, environmental damage and employee dental benefits, as well as obtaining coverage for other risks. The Fund is financed by charges to other County funds. Other Information Independent Audit Arizona Revised Statutes require an annual audit of the financial statements. The County is fully compliant with this legal requirement. An independent auditors’ report is included in this CAFR. Single Audit As a recipient of federal and state financial assistance, the County is required to ensure adequate internal controls are in place to comply with applicable laws and regulations related to administration of these programs. This internal control structure is subject to periodic evaluation by management of Pima County. As a part of the County’s single audit, tests are made to determine 1) the adequacy of the internal control structure, including that portion related to federal financial assistance programs, and 2) whether the County has complied with applicable laws and regulations. The results of the County’s single audit for the fiscal year ended June 30, 2007 cited material weaknesses and significant deficiencies in the County’s administration of the Highway Planning and Construction program over reporting, allowable cost/cost principles, and the Davis-Bacon Act. Additionally, the Homeland Security Grant program reported a significant deficiency pertaining to allowable costs/cost principles. The Single Audit for Pima County for the fiscal year ended June 30, 2008 was not complete at the time of publication of this Comprehensive Annual Financial Report. As demonstrated by the statements and schedules included in the financial section of this report, Pima County continues to meet its responsibility for sound financial management. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Pima County, Arizona for its Comprehensive Annual Financial Report for all fiscal years ended June 30, 1984 through 2007, except for fiscal years ended June 30, 1990 and June 30, 1999, due to missing the filing deadline. In order to receive a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report with contents that conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. In addition, Pima County also received GFOA’s Distinguished Budget Presentation Award for its annual budget for fiscal year ending June 30, 2009. In order to qualify for the Distinguished Budget Presentation Award, the government’s budget had to be judged proficient as a policy document, a financial plan, an operations guide, and a communications device. This is the tenth consecutive year the County’s budget has been so recognized. 5 Acknowledgements Preparation of this report could not be accomplished without the efficient and dedicated service of the staff of the County’s Finance and Risk Management Department. We also wish to thank the Board of Supervisors for its continued support in planning and conducting the County’s financial operations in a responsible fiduciary manner. Respectfully submitted, 6 ASSESSOR CLERK OF THE SUPERIOR COURT RECORDER SCHOOL SUPERINTENDENT TREASURER __ __ __ __ __ ADMINISTRATION COMMUNITY & ECONOMIC DEVELOPMENT _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ 8 JUSTICE & LAW ENFORCEMENT COUNTY ADMINISTRATOR SUPERVISORS BOARD OF MEDICAL SERVICES CLERK OF THE BOARD PUBLIC WORKS JUSTICE COURTS SUPERIOR COURT JUDGES CONSTABLES COUNTY ATTORNEY SHERIFF _ _ _ _ _ _ _ _ __ Elected Officials Elected Officials _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ RESIDENTS OF PIMA COUNTY PIMA COUNTY ORGANIZATIONAL CHART _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ PIMA PIMA COUNTY COUNTY Comprehensive Comprehensive Annual Annual Financial Financial Report Report For For the the Fiscal Fiscal Year Year Ended Ended June June 30, 30, 2008 2007 INTRODUCTORY INTRODUCTORY SECTION SECTION FINANCIAL FINANCIAL SECTION SECTION Independent Auditors' Auditors' Report Report Independent Management’s Discussion Discussion and and Analysis Analysis Management’s Required Supplementary Supplementary Information Information Other Other than than Management’s Management’s Discussion Discussion and and Analysis Analysis Required Combining Statements Statements and and Other Other Schedules Schedules Combining STATISTICAL SECTION SECTION STATISTICAL &).!.#)!, Basic Financial Financial Statements Statements Basic FINANCIAL SECTION The Financial Section contains government-wide, combined, combining, and individual fund financial statements and schedules, which present a financial “overview” of Pima County. (This page is intentionally blank) 12 Management’s Discussion and Analysis Management’s Discussion & Analysis This section of Pima County’s comprehensive annual financial report presents a discussion and analysis of the County’s financial performance during the year ended June 30, 2008, and should be read in conjunction with the County’s basic financial statements in the following sections. All dollar amounts are expressed in thousands (000’s) unless otherwise noted. FINANCIAL HIGHLIGHTS • At June 30, 2008, the County’s combined assets exceeded combined liabilities (net assets) by $1,717,367, an increase of 4.2% from the prior year. Of this amount, $110,175 is available for general government expenses (unrestricted net assets), $241,946 is restricted for specific purposes (restricted net assets), and $1,365,246 is invested in capital assets, net of related debt and accumulated depreciation. Comparative Composition of Pima County Net Assets $1,326,825 $1,365,246 6/30/2007 6/30/2008 $263,862 $241,946 $110,175 $57,101 Invested in capital assets, net of related debt Restricted net assets Unrestricted net assets • Of the total fund balances of the County’s governmental funds, total fund balance increased $86,917 to $317,577, with $295,068 of this amount available for expenditure. The amount available for expenditure is comprised of $64,974 for the General Fund, $152,643 for the Capital Projects Fund and $77,451 for the County’s other governmental funds. • The General Fund unreserved, undesignated fund balance decreased $13,233 from the previous year to $35,438. This balance represents approximately 7.7% of the County’s General fund expenditures and 4.0% of total governmental funds expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements consist of three components: (1) Government-wide financial statements, (2) Fund financial statements, and (3) Notes to the basic financial statements. Required supplementary information is included in addition to the basic financial statements. 13 Government-wide Financial Statements are designed to provide readers with a broad overview of County finances, in a manner similar to a private-sector business. The statement of net assets presents information on all County assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation or sick leave). Both of these government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a portion of their costs through user fees and charges (business-type activities). The governmental activities of the County include general government, public safety, highways and streets, sanitation, health, welfare, culture and recreation, and education and economic opportunity. The business-type activities of the County include Pima Health System & Services, Regional Wastewater Reclamation Department, Development Services and the County’s downtown parking garages. A discretely presented component unit is included in the basic financial statements and consists of a legally separate entity for which the County is financially accountable. The County reports the Southwestern Fair Commission, which operates the County Fairgrounds and the annual Pima County Fair, as a discretely presented component unit. The government-wide financial statements can be found on pages 31 - 33 of this report. Fund Financial Statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance with applicable State statutes and federal Office of Management and Budget (OMB) budgeting guidelines. All of the funds can be divided into three categories: (1) governmental funds, (2) proprietary funds, and (3) fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating the County’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains fifteen individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General and Capital Projects funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The governmental fund financial statements can be found on pages 34 - 37 of this report. 14 Proprietary funds are maintained in two ways. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for certain health care services, including medical and long-term health care, sewer systems maintenance and operation, real estate-related development services, and parking garage operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County’s various functions. The County uses internal service funds to account for risk management, automotive fleet maintenance and operations, printing services, telecommunications, wireless and IT network infrastructure. Because these services predominantly benefit governmental rather than business-type functions, the assets and liabilities of these services have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Regional Wastewater Reclamation Department and Pima Health System & Services operations are considered to be major funds of the County. Data from the other enterprise funds are combined into a single, aggregated presentation. Similarly, the County’s internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the other enterprise and internal service funds are provided in the form of combining statements elsewhere in this report. The proprietary fund financial statements can be found on pages 38 - 41 of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s programs. The fiduciary fund financial statements can be found on pages 42 - 43 of this report. Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found on pages 44 -78 of this report. Required Supplementary Information (RSI) is presented concerning the County’s General Fund budgetary schedule and the Schedule of Retirement Plans’ funding progress. Required supplementary information can be found on pages 79 - 82 of this report. Combining Statements and Other Schedules referred to earlier provide information for non-major governmental, enterprise, internal service and fiduciary funds and are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 84 - 114 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve as a useful indicator of a government’s financial position over time. County assets exceeded liabilities by $1,717,367 at June 30, 2008. The following table shows condensed information for the Schedule of Assets, Liabilities, and Net Assets: 15 Table 1 Schedule of Assets, Liabilities, and Net Assets At June 30, 2008 Current and other assets Capital assets: Land, buildings, equipment, infrastructure & other Total assets Governmental Activities Fiscal Year 2007-2008 2006-2007* Business-type Activities Fiscal Year 2007-2008 2006-2007* Total Fiscal Year 2007-2008 2006-2007* $ $ $ 460,995 $ 369,780 189,217 $ 153,227 650,212 $ 523,007 1,413,881 1,874,876 1,335,344 1,705,124 714,548 903,765 645,602 798,829 2,128,429 2,778,641 1,980,946 2,503,953 Current and other liabilities Long-term liabilities Total liabilities 87,975 667,157 755,132 90,562 538,529 629,091 63,919 242,223 306,142 51,327 175,747 227,074 151,894 909,380 1,061,274 141,889 714,276 856,165 Net assets : Invested in capital assets, net of related debt 882,424 850,582 482,822 476,243 1,365,246 1,326,825 183,542 53,778 $ 1,119,744 179,195 46,256 $ 1,076,033 58,404 56,397 597,623 84,667 10,845 571,755 241,946 110,175 $ 1,717,367 263,862 57,101 $ 1,647,788 Restricted Unrestricted Total net assets $ $ *As restated - See Note 2 in notes to the financial statements The largest portion of the County’s net assets reflects its investment in capital assets (i.e. land, buildings, infrastructure and equipment), less any related outstanding debt used to acquire those assets. As of June 30, 2008, investment in capital assets totaled $1,365,246, comprising approximately 79.5% of total net assets. The County uses a portion of these capital assets to provide services to its citizens, with the other portion available to its citizens for use; consequently, these assets are not available for future spending. The $38,421 increase in capital assets, net of related debt, is primarily due to the significant amount of capital project activity that has been completed and capitalized over the past year. Although the County’s investments in capital assets are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Restricted net assets represent resources that are subject to external restrictions on how they may be used. As of June 30, 2008, restricted net assets totaled $241,946 and comprised approximately 14.1% of total net assets. This represents a $21,916 decrease in restricted net assets from the $263,862 balance of fiscal year 2006-07. The remaining balance of the County’s net assets represents unrestricted net assets, which may be used to meet the County’s ongoing obligations to citizens and creditors. As of June 30, 2008, unrestricted net assets totaled $110,175 and comprised approximately 6.4% of total net assets. Governmental activities The change in net assets for governmental activities was $43,711, an increase of $3,907 from the prior year. The following table shows details of the changes in net assets for governmental activities: 16 Table 2 Governmental Activities Schedule of Changes in Net Assets For the Years Ended June 30, 2008 and 2007 Fiscal Year 2007-2008 2006-2007* Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Property taxes State-shared taxes Investment earnings Other general revenues Total general revenues $ 64,010 144,479 48,672 257,161 $ 66,898 139,324 15,085 221,307 Variance Amount Percent $ (2,888) 5,155 33,587 35,854 -4.3% 3.7% 222.7% 16.2% 377,809 130,337 16,326 39,657 564,129 343,525 133,952 16,439 41,525 535,441 34,284 (3,615) (113) (1,868) 28,688 10.0% -2.7% -0.7% -4.5% 5.4% Total revenues 821,290 756,748 64,542 8.5% Expenses: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization Interest on long-term debt Total expenses 239,398 165,715 88,488 9,658 36,977 106,546 60,616 47,296 138 22,860 777,692 223,266 148,831 92,985 9,623 33,800 97,154 55,482 42,483 168 18,924 722,716 16,132 16,884 (4,497) 35 3,177 9,392 5,134 4,813 (30) 3,936 54,976 7.2% 11.3% -4.8% 0.4% 9.4% 9.7% 9.3% 11.3% -17.9% 20.8% 7.6% 43,598 34,032 9,566 28.1% 113 5,051 721 (5,051) (608) -100.0% -84.3% 43,711 39,804 3,907 9.8% 43,711 4.2% Excess before contributions and transfers Contributions Transfers in Change in net assets Ending net assets (as restated) $ 1,119,744 $ 1,076,033 $ *As restated - See Note 2 in notes to the financial statements Key elements of the change in net assets from governmental activities include: • Revenue from capital grants and contributions increased by $33,587. $23,597 of the increase is due to a change in reporting from fiscal year 2006-07, from “Contributions”, a general revenue, to “Capital grants and contributions”, a program revenue. The $23,597 change was comprised of $14,708 received from developers for roadways and $8,889 in land contributions. In addition, there was a $4,701 increase in Regional Transportation Authority (RTA) funding, a $1,982 increase in outside contributions to Transportation capital improvement projects for utility infrastructure relocation and a $1,392 increase from the Pima Association of Governments (PAG) HURF funds to repay the HELP loan on a roadway project. 17 • Property taxes increased by $34,284 as a result of an increase in property valuations for primary and secondary taxes that was partially offset by a decrease in the primary tax rate. • General government expenses increased by $16,132, of which $11,510 were increases in the General Fund that reflect a 45% increase in personal services, 30% increases in utilities and repair & maintenance, and a 25% increase due to the state-wide Qwest property lawsuit settlement. In addition, there was $3,013 of other postemployment benefits (OPEB) expenses not reported in the prior fiscal year. • Public Safety expenses increased by $16,884 due to a $14,578 increase within the General Fund as a result of a $9,000 increase in personal services for the Sheriff’s department and the addition of $2,047 for OPEB expenses not reported in the prior fiscal year. • Welfare expenses increased by $9,392 due to an increase in the payments to University Physicians, Inc. from approximately $14,800 to $25,000. Business-type activities Business-type activities added $25,868, or 37.2%, of the County's $69,579 change in total net assets for the year ended June 30, 2008. The following table shows changes in net assets for business-type activities: Table 3 Business-type Activities Schedule of Changes in Net Assets For the Years Ended June 30, 2008 and 2007 Fiscal Year 2007-2008 2006-2007* Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Investment earnings Other general revenues Total general revenues $ 409,140 4,806 22,952 436,898 $ 376,195 5,174 803 382,172 Variance Amount Percent $ 32,945 (368) 22,149 54,726 8.8% -7.1% 2758.3% 14.3% 1,211 (236) 975 22.0% -15.5% 13.9% 6,721 1,286 8,007 5,510 1,522 7,032 Total revenues 444,905 389,204 55,701 14.3% Expenses: Wastewater Management Pima Health System & Services Development Services Parking Garages Total expenses 106,803 295,494 14,750 1,877 418,924 98,222 261,859 15,400 1,579 377,060 8,581 33,635 (650) 298 41,864 8.7% 12.8% -4.2% 18.9% 11.1% 25,981 12,144 13,837 113.9% 25,217 (721) (25,217) 608 -100.0% 84.3% 36,640 (10,772) -29.4% Excess before contributions and transfers Contributions Transfers in (out) (113) Change in net assets Ending net assets (as restated) 25,868 $ 597,623 $ 571,755 $ 25,868 4.5% *As restated - See Note 2 in notes to financial statements 18 Key elements of the change in net assets from business-type activities include: • Charges for services revenue increased by $32,945 due primarily to a $30,712 increase in capitation revenue associated with the AHCCCS/ALTCS program for Pima Health System & Services fund. Both the contractual rate and number of members increased for both programs for fiscal year 2007-08 compared to the prior year. This increase was partially offset by a decrease in revenue for Development Services due to a decline in the number of permits issued. • Capital grants and contributions increased by $22,149 as a result of a change in reporting from the prior year. In fiscal year 2006-07, outside contributions of assets were reported as “Contributions”, a general revenue. In the current fiscal year, contributions of $22,910 are reported under “Capital grants and contributions”, a program revenue. • Investment earnings increased by 22%, or $1,211, due to higher cash balances generated from capitation revenue within Pima Health System & Services. Capitation revenue is advanced prior to the payment of related expenses during the fiscal year. • Expenses for Regional Wastewater Reclamation Department increased by $8,581 due primarily to increased costs for operations, such as employee compensation ($4,846), general and administrative ($2,707) and consultants and professional services ($2,371). • Expenses for Pima Health System & Services increased by $33,635 due to higher expenses for medical claims that were based on increased member enrollment and rates paid to providers for both the AHCCCS and ALTCS programs. FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds The County’s general government functions are accounted for in the General, Special Revenue, Debt Service, and Capital Project funds. Included in these funds are special districts governed by the Board of Supervisors (i.e. Flood Control, Library and Stadium Districts). The focus of the County's governmental funds is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the County's financing requirements. In particular, unreserved fund balances may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Major Governmental Funds General Fund The General Fund is the chief operating fund of the County. At June 30, 2008, unreserved, undesignated fund balance of the general fund was $35,438 while total fund balance was $70,389. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved, undesignated fund balance and total fund balance to total fund expenditures. Unreserved, undesignated fund balance represents 7.7% of total General Fund expenditures, while total fund balance represents 15.3% of that same amount. Total fund balance for the General Fund increased $12,829 compared to the prior fiscal year. Revenue increased by $11,911 and reflects the following changes: • An increase of $16,143 for property taxes was primarily due to higher assessed property valuations that were partially offset by lower tax rates. • Intergovernmental revenue declined by $4,113 as a result of decreases of $3,000 in State Sales Tax and $789 in Hotel/Motel Tax revenues. 19 • Charges for services declined by $1,297, as the prior year reported a one-time receipt of $1,235 for the RTA special election. Expenditures increased by $39,051 as a result of the following changes: • $11,510 for general government expenditures due to higher personal services reflecting increased rates for salaries and retirement contributions, increased utility costs based on occupation of newly-added County facilities such as the Abrams Public Health Center, higher costs for motor pool charges due to the rising cost of fuel and the settlement of the state-wide Qwest property tax lawsuit. • $11,798 for public safety expenditures that also reflect higher costs for personal services related to salaries, medical/dental and retirement benefits costs and increased motor pool costs associated with the higher cost of fuel. • $9,818 for welfare expenditures related to increased payments to University Physicians, Inc. and their management of the Kino Campus. The excess of revenues over expenditures was $8,069, which is further increased by net operating transfers in of $4,760. During fiscal year 2007-08, funds to be used for the repayment of the 2008 COPs issue were transferred into the General Fund. Budget to Actual Comparison for the General Fund Overall, actual revenues were less than budgeted revenues by $611 and actual expenditures were less than budgeted expenditures by $28,233. No variances between the budget to actual amounts were significant enough to affect the County’s ability to provide future services. Capital Projects Fund Total fund balance for the Capital Projects Fund increased $63,195 compared to the prior fiscal year. Revenue increased by $4,821 and reflects the following changes: • Intergovernmental revenue increased by $5,996 due to the construction on a larger number of RTA-funded roadway projects and also because of funding from the City of Tucson for utility relocation work on several roadway projects. • Charges for services revenue is predominately a reflection of developer fees collected for a number of benefit areas. Fiscal year 2007-08 marks the second straight year that this revenue source has declined, dropping $3,578 during the year, as home construction activity continues to be depressed, especially for the Mountain View, San Xavier and Avra Valley benefit areas. • Miscellaneous revenue increased $2,904 due to the following changes: ƒ $237 from the Tucson Unified School District for the Arroyo Chico Detention Basin project to alleviate flooding problems along the High School Wash. ƒ $300 from the Continental Family Medical Center for the Continental Health Clinic project for building construction. ƒ $768 from Kinder Morgan for the Thomas Jay Park Improvements project to compensate for environmental impact resulting from construction of a new oil pipeline. ƒ $1,705 from several companies, such as Tucson Electric Power Co., Southwest Gas, Comcast and Cox Communications, for utility relocation work on several roadway projects. Capital project expenditures decreased by $63,120 in fiscal year 2007-08 compared to the prior year. The following events identify significant portions of the decrease: 20 • Building acquisitions decreased significantly relative to the prior year, as the Bank of America building ($25,000) and new emergency communications center ($6,258) were acquired last fiscal year. • Acquisitions under the Open Space Preservation program decreased by $8,201. In fiscal year 2006-07, significant open space acquisitions totaled $18,768, compared to the following acquisitions totaling $9,920 that occurred in the current fiscal year: ƒ Brown property for $4,614 ƒ Cochie Canyon property for $2,929 ƒ Tang property for $2,377 • Spending on park improvement projects declined by $5,283 due to the completion of the Flowing Wells Community Center, Curtis Park improvements, Brandi Fenton Park improvements and Picture Rocks Pool. • The Sahuarita landfill expansion project was completed last fiscal year with spending of $6,356 and minimal costs in the current year. • Spending in the Transportation program decreased by $17,614 due to the completion of several projects last fiscal year. In fiscal year 2006-07, there were 12 roadway projects that expended more than $1,000 compared to 5 in the current year. The deficiency of revenues under expenditures was $105,698. Other financing sources during the year were the issuance of general obligation bonds of $100,000, transportation bonds of $25,000, and certificates of participation of $50,000, resulting in a net change in fund balance for the Capital Projects Fund of $63,195. Overview of all governmental funds At June 30, 2008, the County's governmental funds reported combined fund balances of $317,577, an increase of $86,917 from the prior year. Approximately 84% of the combined fund balances, or $265,532, constitutes unreserved and undesignated fund balance, which is available to meet the County's current and future needs. Fund Balances - Governmental Funds FY07/08 (in Millions) FY06/07 $266 $52 $208 $- $50 $100 $23 $150 $200 $250 Unreserved/undesignated Reserved 21 $300 $350 The remainder of fund balance is reserved or designated to indicate that it is not available for new spending because it has been committed to the following: • $29,536 for debt service specifically for the 2008 Certificates of Participation (COPs) • $12,395 for debt service on various bond and other debt instruments • $5,985 to reflect inventories and prepaid amounts • $2,766 for specified programs • $1,264 to reflect a loan receivable • $99 for capital repairs and refurbishments Revenues for governmental functions totaled approximately $804,102 in fiscal year 2007-08, which represents an increase of $42,767 (5.6%) from the previous year. The following table presents the amount of revenues from various sources and increases or (decreases) from the prior year. Table 4 Governmental Funds Revenues Classified by Source Fiscal Year 2007-2008 2006-2007 Amount Percent Amount Percent Revenues by source: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Interest Miscellaneous Total revenues $ $ 381,862 556 7,710 312,634 58,890 6,480 14,218 21,752 804,102 47.5% 0.1% 0.9% 38.9% 7.3% 0.8% 1.8% 2.7% 100.0% $ $ 348,700 521 7,132 303,392 63,508 6,550 13,988 17,544 761,335 45.8% 0.1% 0.9% 39.9% 8.3% 0.9% 1.8% 2.3% 100.0% Variance Amount Percent $ $ 33,162 35 578 9,242 (4,618) (70) 230 4,208 42,767 9.5% 6.7% 8.1% 3.1% -7.3% -1.1% 1.6% 24.0% 5.6% The following provides an explanation of revenues by source that changed significantly over the prior year: • Taxes Revenues from property taxes increased $33,162 reflecting higher primary tax revenues of $16,143 and secondary tax revenues of $17,019. Increased property tax revenue resulted from higher property valuations that were partially offset by a decrease in the primary tax rate. • Intergovernmental The $9,242 increase in intergovernmental revenue was due primarily to a $5,996 increase within the Capital Projects Fund previously discussed. In addition, there was a $4,804 increase in grant funding reimbursements for pass-through expenditures in Sheriff Department grants, $1,500 for the Homeland Security grant and $757 from the Arizona DPS Border Crimes grants. • Charges for services The $4,618 decrease in charges for services revenue resulted from a drop in permits issued and no revenue from RTA for special elections, as previously discussed, for both the General and Capital Projects Funds. In addition, there was a $1,812 decrease in contributions compared to the prior year. However, the Solid Waste Fund reported an increase of $1,096 due to the re-opening of the Sahuarita landfill to commercial traffic. 22 The following table presents expenditures by function compared to prior year amounts: Table 5 Governmental Funds Expenditures by Function Fiscal Year Government Function General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service: - Principal - Interest - Miscellaneous Total expenditures 2007-2008 Amount Percent $ 237,640 26.6% 149,475 16.7% 43,741 4.9% 8,310 0.9% 34,352 3.8% 106,607 11.9% 50,509 5.7% 42,286 4.7% 139,539 15.6% 2006-2007 Amount Percent $ 222,434 24.9% 132,930 14.9% 42,683 4.8% 6,766 0.8% 32,311 3.6% 97,168 10.9% 45,197 5.1% 38,474 4.3% 202,659 22.7% 59,719 22,639 330 $ 895,147 53,733 18,965 12 $ 893,332 6.7% 2.5% 0.0% 100.0% 5.9% 2.1% 0.0% 100.0% Variance Amount Percent $ 15,206 6.8% 16,545 12.4% 1,058 2.5% 1,544 22.8% 2,041 6.3% 9,439 9.7% 5,312 11.8% 3,812 9.9% (63,120) -31.1% $ 5,986 3,674 318 1,815 11.1% 19.4% 2650.0% 0.2% Total expenditures in governmental funds increased during fiscal year 2007-08 by $1,815. • General government expenditures increased by $15,206. Of this amount, 75.7% occurred within the General Fund, which has been previously discussed. Within the Recorder’s office, there was an increase of $1,958 due to the conversion from a PC-based to a mainframe system for document storage and retrieval. In addition, the County Attorney’s anti-racketeering program had increased costs of $424. • Public safety expenditures increased by $16,545 primarily due to a $9,000 increase in personal services for the Sheriff's Department that was based on a $1,100 increase in step pay, range adjustments and new positions, a $2,400 pay increase for commissioned & corrections officers, an $1,800 pay increase for civilian positions and a $1,500 and $650 increase in retirement contributions and medical/dental insurance costs, respectively. In addition, there was a $2,000 increase in motor pool charges over last fiscal year. • Welfare expenditures increased by $9,439 for payments to University Physicians, Inc., as previously discussed under the General Fund section. • Capital outlay expenditures decreased by $63,120 as previously discussed under the Capital Projects Fund section. • Debt service principal and interest costs increased $5,986 and $3,674, respectively. The most significant changes were as a result of the issuance of general obligation bonds with increases in both principal and interest of $4,535 and $1,832, respectively. 23 Proprietary funds The County’s proprietary fund functions are contained in the enterprise and internal service funds. The enterprise funds of the County are Pima Health System and Services, Regional Wastewater Reclamation Department, Development Services and Parking Garages. These business-type activities are accounted for in a similar fashion to private-sector businesses, and the costs for services provided are expected to be covered either fully or in part by current revenues generated, which include fees charged to external users. The following table presents a comparison of this year’s enterprise fund activities with the prior year: Table 6 Enterprise Funds Schedule of Revenues, Expenses and Changes in Net Assets For the Fiscal Years ended June 30, 2008 and 2007 Fiscal Year 2007-2008 2006-2007 Operating revenues: Net patient services Charges for services Other Total net operating revenues $ 289,651 87,770 1,302 378,723 $ 255,275 84,106 1,526 340,907 Variance Amount Percent $ 34,376 3,664 (224) 37,816 13.5% 4.4% -14.7% 11.1% Operating expenses: Employee compensation Medical claims Operating supplies & services Utilities Sludge and refuse disposal Repair and maintenance General and administrative Consultants and professional services Depreciation and amortization Total operating expenses 85,298 237,926 10,078 7,737 1,602 4,498 22,466 11,911 25,288 406,804 77,627 208,122 11,140 7,253 1,649 6,441 18,761 9,649 23,844 364,486 7,671 29,804 (1,062) 484 (47) (1,943) 3,705 2,262 1,444 42,318 9.9% 14.3% -9.5% 6.7% -2.9% -30.2% 19.8% 23.4% 6.1% 11.6% Operating loss (28,081) (23,579) (4,502) -19.1% Nonoperating revenues (expenses): Intergovernmental revenue Invesment earnings Sewer connection fees Interst expense Loss on disposal of capital assets Amortization of deferred charges Premium tax Total nonoperating revenues 5,514 6,822 31,037 (6,653) (534) (136) (5,893) 30,157 12,029 5,556 30,757 (6,540) (1,601) (109) (5,091) 35,001 (6,515) 1,266 280 (113) 1,067 (27) (802) (4,844) -54.2% 22.8% 0.9% -1.7% 66.7% -24.8% -15.8% -13.8% Income (loss) before contributions and transfers 2,076 11,422 (9,346) -81.8% Capital contributions Transfers in Transfers (out) Change in net assets $ 24 23,510 9,545 (10,259) 24,872 $ 25,217 17 (738) 35,918 $ (1,707) -6.8% 9,528 56047.1% (9,521) -1290.1% (11,046) -30.8% While net operating revenues for the County’s Enterprise Funds increased $37,816, operating expenses increased $42,318, resulting in an operating loss of $28,081, an operating loss increase of $4,502 from the prior year. The operating loss was due to reported losses of $25,454 by the Regional Wastewater Reclamation Department, $5,720 by Development Services and $161 by Parking Garages, offset by operating income reported by Pima Health System and Services of $3,254. Key activity within the enterprise funds for fiscal year 2007-08 includes the following: • Net patient services revenues increased by $34,376 from fiscal year 2006-07. This is attributable to increased membership enrollment and rates for Pima Health System and Services, which generated increases in capitation revenues. • Employee compensation expenses increased by $7,671 from fiscal year 2006-07, due to an increase of $4,846 for Regional Wastewater Reclamation Department and $2,419 for Pima Health System & Services. Both increases were primarily due to the Board of Supervisors’ approved salary and retirement rate increases, as well as the introduction of the OPEB liability not previously reported. • Medical claims expense increased by $29,804 due to an increase in the vendor rates and member enrollment for both the AHCCCS and ALTCS programs within Pima Health System and Services during the fiscal year. • General and administrative expenses increased $3,705, due primarily to sewer relocation projects undertaken by the City of Tucson of $1,285 and to the cost-sharing agreement with the Transportation department for various sewer relocation projects of $964. • Intergovernmental revenue decreased $6,515, as no revenues were received in the current year from Regional Wastewater Reclamation Department projects completed last fiscal year (i.e. Federal Prison Sewer System). • Transfers in and out reflect the movement of 2008 COPs funding into and System Development Funding (SDF) out of the Regional Wastewater Reclamation Department. In addition, there was a budgeted transfer out of the Development Services Fund for a building remodel project that was cancelled. These funds, less expenses already incurred, were transferred back into the fund. Capital Assets and Debt Administration Capital Assets The County’s investment in capital assets for its governmental and business-type activities as of June 30, 2008 amounted to $2,128,429 (net of accumulated depreciation), an increase of 7.5%. Of the $147,483 increase in net capital assets, $78,537 (53.3%) came from governmental activities and $68,946 (46.7%) came from business-type activities. The County’s investment in capital assets consists of land, buildings, sewage conveyance systems, infrastructure, equipment and construction in progress. Capital assets for the governmental and business-type activities are presented below to illustrate changes from the prior year: 25 Table 7 Governmental and Business-type Activities Capital Assets Land Construction in progress Buildings and improvements Sewage conveyance system Equipment Infrastructure Total Governmental Activities Fiscal Year 2007-2008 2006-2007* $ 303,646 $ 276,126 90,098 109,307 366,370 355,608 44,655 609,112 $ 1,413,881 39,560 554,743 $ 1,335,344 Business-type Activities Fiscal Year 2007-2008 2006-2007* $ 10,596 $ 9,695 72,060 35,637 234,142 239,576 369,514 348,748 28,236 11,946 $ 714,548 $ 645,602 Total Fiscal Year 2007-2008 2006-2007* $ 314,242 $ 285,821 162,158 144,944 600,512 595,184 369,514 348,748 72,891 51,506 609,112 554,743 $ 2,128,429 $ 1,980,946 *As restated - See Note 2 in notes to the financial statements Major capital asset events during the current fiscal year included the following: Land increased by $27,520 due primarily to the following acquisitions for governmental activities: • • • • • • • $4,614 for the Brown property, $2,929 for the Cochie Canyon property, $2,377 for the Tang property, $967 for the Chilton property, $1,758 for various other open space acquisitions, $3,169 for land acquisition related to flood control projects, $2,426 for land acquisition related to transportation road projects. In addition, the County received contributions in the form of land as follows: • • • • $6,332 for land under developer-contributed roadways, $1,239 for preservation easements on cultural resources projects, $864 from the City of Tucson for the Animal Shelter & Jackson Employment Center projects, $450 from the Town of Marana for the Library District. Infrastructure for governmental activities increased by $54,369 due primarily to completion of the following Transportation roadway projects: • • • • • Craycroft Rd. - River to Sunrise for $28,902, Valencia Rd. - Mark to Camino de la Tierra for $17,947, Colossal Cave Rd. - Camino Loma Alta to Vail for $8,312, Sunrise Dr. - Craycroft to Kolb for $6,675, Country Club Rd. - 36th to Irvington for $3,337. In addition, the County received contributions from developers in the form of roadways in the amount of $14,708. Flood Control District had several drainage improvement projects that were completed during the fiscal year in the amount of $4,100. Sewage conveyance systems increased by $20,766 due primarily to the contribution of developer-built conveyance systems for $23,667, as opposed to any significant project completion. Construction-in-progress for governmental activities decreased by $19,209, while construction-in-progress for business-type activities increased $36,423. Construction-in-progress for governmental activities decreased due to a decline in spending for all governmental departments, primarily with Transportation and Facilities projects. In contrast, with the sale of Sewer Revenue bonds, spending within the Regional Wastewater Reclamation 26 Department’s program significantly increased by $55,500, which was partially reduced by capitalization of completed projects for $18,600. The County’s infrastructure assets are recorded at historical cost and estimated historical cost in the governmentwide financial statements. Additional information regarding the County’s capital assets can be found in Note 5 to the financial statements on pages 56-57 of this report. Long-term Debt Significant, comparative long-term debt entered into during the last two fiscal years is presented below: Table 8 Long-Term Debt Fiscal Year 2007-2008 2006-2007 Bonds issued (at face value): General obligation Street and highway revenue Sewer revenue COPs Capital leases Total $ $ 100,000 25,000 75,000 50,000 312 250,312 $ 95,000 21,000 50,000 30,320 $ 196,320 During the fiscal year, the county received $100,000 in proceeds from the sale of general obligation bonds and $25,000 from the sale of transportation revenue bonds. As of June 30, 2008, $51,338 of proceeds from general obligation (GO) bonds and $9,914 from transportation revenue (HURF) bonds were unspent. The majority of the general obligation bonds were spent on projects for Facilities Management, Flood Control District, open space and parks and recreational facilities, while proceeds from transportation revenue bonds were allocated to various roadway projects. In addition, during the fiscal year, the County sold $50,000 in certificates of participation (COPs) primarily to fund wastewater and transportation infrastructure as well as to fund County-wide capital equipment purchases. Pima County maintains the following ratings for its bonds and COPs as of June 30, 2008: Certificates of Participation General Obligation Transportation Sewer Revenue Moody’s Investor Service A1 Aa3 A1 A1 Standard and Poor’s A+ AAAA A+ State statutes limit the amount of general obligation debt a governmental entity may issue to 15% of its net assessed valuation. The current debt limitation for Pima County is $1,233,059, which is significantly in excess of Pima County’s outstanding general obligation debt. Additional information regarding the County’s debt can be found in Note 7 to the financial statements on pages 6068 of this report. Economic Factors and Next Year’s Budget General fund General government revenues, excluding property tax revenues, are budgeted in fiscal year 2008-09 at $158.2 million, approximately $6.2 million less than the amount budgeted for fiscal year 2007-08. The decline of several 27 types of projected revenues is reflective of slowing in the local and national economies and the significant shift of expenditures from the State of Arizona to local governments. Numerous factors, including a downturn in residential construction, a decline in housing prices, problems in the credit and capital markets and rising energy prices have all contributed to the current financial condition. As of October 31, 2008, the most current projections of general government revenues for fiscal year 2008-09 indicate an additional decrease of $11 million below the fiscal year 2008-09 budgeted revenues. After the County’s adoption of the fiscal year 2008-09 budget, the State legislature shifted additional State costs to Pima County for fiscal year 2008-09. The State is experiencing a deficit estimated as of November 6, 2008 to be $1.2 billion which could result in additional cost shifts to local governments before the end of fiscal year 2008-09. The adopted budget for fiscal year 2008-09 has expenditures for the General Fund increasing by approximately $12.6 million primarily due to the following: • $4.8 million to fund the costs of the primary and general elections held in 2008 • $2.6 million net increase in state mandated employer contributions to the various state retirement systems; and $1.1 million net increase in the County’s contribution towards the cost of nonretirement benefits • $2.4 million increase to annualize the cost of fiscal year 2007-08 salary increases awarded to corrections and peace officers • $2.3 million of additional funding related to detention health care costs • $1.1 million for increased cost of fuel for vehicles and equipment As part of its budget for fiscal year 2008-09, the County set aside $7.2 million into the Budget Stabilization Fund in order to prepare for the potential negative financial impacts of cost shifts which the State may impose on the County to balance the State's budget for fiscal year 2008-09. Transportation By the end of October 2009, the County is projecting that the fiscal year 2008-09 HURF and VLT revenues received by the County will decrease by $5.8 million below the amount adopted in the fiscal year 2008-09 budget. In an effort to reduce expenditures to deal with the revenue shortfall, the County has initiated cost saving measures within the Transportation department. Additionally, revenues from impact fees are substantially lower than budgeted for fiscal year 2008-09. Development Services Consistent with the slowdown in the housing industry for the last two fiscal years, the Development Services department is projecting further decline in housing permits and associated revenues by approximately $5 million (46% of budgeted revenues) in fiscal year 2008-09. The economic situation is not expected to improve in the near future. The County has therefore initiated major cost saving measures within the Development Services department to reduce expenditures. Regional Wastewater System As with other activities impacted by real estate development, the number of new connections to the County’s sewer system has declined during fiscal year 2008-09 as compared to prior years. The County expects an approximate $10 million reduction in connection fees. To address this, the department is reducing expenditures within the system and requesting rate increases. The County has also requested permission to extend the time limits required by the Arizona Department of Environmental Quality for infrastructure improvements to the system. 28 Pima Health System and Services (PHS&S) Effective October 1, 2008, Pima County’s ambulatory services contract with the Arizona Healthcare Cost Containment System (AHCCCS) was not renewed. In response to the loss of that contract, the County reduced the budget for PHS&S by $84 million, from the recommended expenditure budget of $312 million to a final adopted budget of $228 million. Request for Information This financial report is designed to provide a general overview of the County’s finances. Any questions concerning the information provided in this report or requests for additional financial information should be addressed to the Finance and Risk Management Department, 130 W. Congress, 6th Floor, Tucson, AZ, 85701. 29 (This page is intentionally blank) 30 Basic Financial Statements PIMA COUNTY, ARIZONA Statement of Net Assets As of June 30, 2008 (in thousands) Governmental Activities Assets Cash and cash equivalents Property taxes receivable (net) Interest receivable Internal balances Due from other governments Accounts receivable (net) Inventories Prepaids Special assessments receivable Other assets Restricted assets: Cash and cash equivalents Loans receivable Capital assets not being depreciated: Land Construction in progress Capital assets being depreciated (net): Buildings and improvements Sewage conveyance system Equipment Infrastructure $ 376,539 11,968 1,172 510 49,341 3,492 2,204 5,036 1,340 7,058 Primary Government Business-type Activities $ Liabilities Accounts payable Accrued medical and healthcare claims Interest payable Contract retentions Employee compensation Due to other governments Deposits and rebates Deferred revenues Noncurrent liabilities: Due within one year Due in more than one year Total liabilities 483,729 11,968 1,620 Component Unit Southwestern Fair Commission $ 50,300 24,755 5,905 5,235 1,340 9,459 1,805 38 32 1,071 1,264 53,566 54,637 1,264 303,646 90,098 10,596 72,060 314,242 162,158 366,370 234,142 369,514 28,236 600,512 369,514 72,891 609,112 1,590 1,874,876 903,765 2,778,641 4,097 36,668 17,229 34,375 1,270 258 1,408 53,897 34,375 1,283 564 46,625 4,125 1,279 9,746 83,744 583,413 755,132 14,414 227,809 306,142 98,158 811,222 1,061,274 351 882,424 482,822 1,365,246 2,222 791 37,925 5,956 13,732 56,397 597,623 71,618 17,390 14,403 118,847 5,956 13,732 110,175 1,717,367 7,565 2,072 71,618 17,390 13,612 80,922 $ $ 2,401 13 564 39,060 2,053 1,279 8,338 Net Assets Invested in capital assets, net of related debt Restricted for: Facilities, justice, library, tax stabilization and community development Highways and streets Debt service Capital projects Regional wastewater Healthcare Unrestricted Total net assets Total 448 (510) 959 21,263 3,701 199 44,655 609,112 Total assets 107,190 Exhibit A-1 53,778 1,119,744 $ $ See accompanying notes to financial statements 31 38 594 21 72 $ 1,524 3,746 PIMA COUNTY, ARIZONA Statement of Activities For the Year Ended June 30, 2008 (in thousands) Program Revenues Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization - unallocated Interest on long-term debt Total governmental activities Expenses $ Charges for Services 239,398 $ 165,715 88,488 9,658 36,977 106,546 60,616 47,296 138 22,860 777,692 25,502 $ 9,550 9,316 5,930 9,965 106,448 291,980 8,992 1,720 409,140 473,150 $ 5,472 $ 5,472 $ Business-type activities: Regional Wastewater Reclamation Department Pima Health System & Services Development Services Parking Garages Total business-type activities Total primary government $ 106,803 295,494 14,750 1,877 418,924 1,196,616 $ Component unit: Southwestern Fair Commission Total component units $ $ 5,144 $ 5,144 $ 3,031 716 64,010 General revenues: Property taxes, levied for general purposes Property taxes, levied for regional flood control district Property taxes, levied for library district Property taxes, levied for debt service Hotel/motel taxes, levied for sports facility and tourism Other taxes, levied for stadium district Unrestricted share of state sales tax Unrestricted share of state vehicle license tax Grants and contributions not restricted to specific programs Interest and penalties on delinquent taxes Investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year, as restated Net assets at end of year See accompanying notes to financial statements 32 Operating Grants and Contributions 31,834 $ 12,868 60,202 1,152 12,630 99 4,826 20,868 Capital Grants and Contributions 370 1,160 44,898 1,904 340 144,479 48,672 83 4,723 22,880 72 4,806 149,285 $ 22,952 71,624 120 120 Exhibit A-2 Net (Expense) Revenue and Changes in Net Assets Governmental Activities $ Primary Government Business-type Activities (181,692) (142,137) 25,928 (2,576) (14,382) (106,447) (50,855) (25,372) (138) (22,860) (520,531) Total $ $ (520,531) 22,608 1,281 (5,758) (157) 17,974 17,974 Component Unit Southwestern Fair Commission (181,692) (142,137) 25,928 (2,576) (14,382) (106,447) (50,855) (25,372) (138) (22,860) (520,531) Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization - unallocated Interest on long-term debt Total governmental activities 22,608 1,281 (5,758) (157) 17,974 (502,557) Business-type activities: Regional Wastewater Reclamation Department Pima Health System & Services Development Services Parking Garages Total business-type activities Total primary government $ $ 263,681 25,468 32,564 56,096 8,176 1,952 103,171 27,166 7,748 6,365 16,326 15,416 113 564,242 43,711 1,076,033 1,119,744 $ 6,721 1,286 (113) 7,894 25,868 571,755 597,623 $ 448 448 263,681 25,468 32,564 56,096 8,176 1,952 103,171 27,166 7,748 6,365 23,047 16,702 116 572,136 69,579 1,647,788 1,717,367 116 564 3,182 3,746 $ Component unit: Southwestern Fair Commission Total component units General revenues: Property taxes, levied for general purposes Property taxes, levied for regional flood control district Property taxes, levied for library district Property taxes, levied for debt service Hotel/motel taxes, levied for sports facility and tourism Other taxes, levied for stadium district Unrestricted share of state sales tax Unrestricted share of state vehicle license tax Grants and contributions not restricted to specific programs Interest and penalties on delinquent taxes Investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year, as restated Net assets at end of year See accompanying notes to financial statements 33 PIMA COUNTY, ARIZONA Balance Sheet - Governmental Funds June 30, 2008 (in thousands) General Exhibit A-3 Other Governmental Funds Capital Projects Total Governmental Funds Assets Cash and cash equivalents Property taxes receivable (net) Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expenditures Special assessments receivable Loan receivable Other assets Restricted cash equivalents Total assets $ 61,446 8,070 167 12,031 24,714 1,480 $ 167,986 $ 474 5,650 4,200 540 4,151 1,264 160 93,326 3,898 359 2,568 20,247 1,325 1,646 188 1,340 $ 322,758 11,968 1,000 20,249 49,161 3,345 1,646 4,339 1,340 1,264 5,360 1,071 5,200 1,071 $ 113,483 $ 179,921 $ 130,097 $ 423,501 $ 11,759 2 2 8,840 6,575 58 208 15,650 $ 11,997 5 562 46 11,628 1,206 1,071 763 $ 11,165 6 $ 18,055 34,921 13 564 12,216 20,415 2,048 1,279 34,468 35,552 105,924 1,646 188 12,395 99 2,766 1,264 1,646 4,339 12,395 99 2,766 1,264 29,536 29,536 Liabilities and fund balances Liabilities: Accounts payable Interest payable Contract retentions Employee compensation Due to other funds Due to other governments Deposits and rebates Deferred revenues Total liabilities 43,094 Fund balances: Reserved for: Inventory Prepaid expenditures Debt service Capital repairs and refurbishments Specified programs Loan receivable Unreserved, designated for: Debt service Unreserved, undesignated: General fund Capital projects Special revenue 27,278 4,151 35,438 77,451 35,438 152,643 77,451 94,545 317,577 152,643 Total fund balances Total liabilities and fund balances 3,330 2,212 784 70,389 $ 113,483 152,643 $ 179,921 $ See accompanying notes to financial statements 34 130,097 $ 423,501 PIMA COUNTY, ARIZONA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2008 (in thousands) Exhibit A-4 Fund balances - total governmental funds $ 317,577 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds Governmental capital assets Less accumulated depreciation Some liabilities and their associated issuance costs are not due and payable in the current period and therefore are not reported in the governmental funds Bonds payable Certificates of participation payable Loans and leases payable Unamortized deferred issuance costs reported as other assets $ 2,033,522 (639,242) 1,394,280 (500,069) (81,612) (24,223) 1,698 (604,206) Some compensated absences are not due and payable shortly after June 30, 2008, and therefore are not reported in the governmental funds Employee compensation Some liabilities are not due and payable shortly after June 30, 2008, and are therefore not reported in the governmental funds Landfill liability Future postemployment health benefit liability Pollution remediation liability (26,958) (18,419) (8,779) (1,784) (28,982) Deferred revenue in governmental funds is susceptible to full accrual on the government-wide statements 26,130 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets 41,903 Net assets of governmental activities $ See accompanying notes to financial statements 35 1,119,744 PIMA COUNTY, ARIZONA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2008 (in thousands) General Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous $ 2,971 148,158 32,307 5,020 3,343 8,314 Total revenues $ $ 468,606 Expenditures: Current: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service - principal - interest - miscellaneous Other Governmental Funds Capital Projects 268,493 Exhibit A-5 Total Governmental Funds 4,812 3,167 113,369 556 4,739 147,453 17,744 1,460 6,063 10,271 33,841 301,655 804,102 44,801 30,852 43,741 8,310 31,446 105 34,184 24,868 56,604 19,834 326 237,640 149,475 43,741 8,310 34,352 106,607 50,509 42,286 139,539 59,719 22,639 330 295,071 895,147 17,023 8,839 192,839 118,623 2,906 106,502 16,325 17,418 $ 139,539 3,115 2,805 4 Total expenditures 460,537 Excess (deficiency) of revenues over (under) expenditures 139,539 8,069 Other financing sources (uses): Proceeds on capital leases Premium on long-term debt Face amount of long-term debt Proceeds from sale of capital assets Transfers in Transfers (out) (105,698) 381,862 556 7,710 312,634 58,890 6,480 14,218 21,752 6,584 (91,045) 312 745 47,854 (43,094) 29,160 (36,486) 27 51,392 (48,112) 312 1,964 175,000 27 128,406 (127,692) Total other financing sources 4,760 168,893 4,364 178,017 Net change in fund balances 12,829 63,195 10,948 86,972 Fund balance at beginning of year 57,560 89,448 83,652 230,660 1,219 175,000 Change in reserve for inventory Fund balance at end of year (55) $ 70,389 $ 152,643 See accompanying notes to financial statements 36 $ 94,545 (55) $ 317,577 PIMA COUNTY, ARIZONA Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2008 (in thousands) Net change in fund balances - total governmental funds $ Exhibit A-6 86,972 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is depreciated over their estimated useful lives and reported as depreciation expense Expenditures for capital assets Less current year depreciation $ 105,819 (51,609) 54,210 Transfers of capital assets between governmental activities and proprietary funds or internal service funds are not reported in the governmental funds but are recognized in the statement of activities (615) The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds but increases long-term liabilities in the statement of net assets. Repayment of the principal of debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items Proceeds of long-term debt Debt service - principal payments Premium on long-term debt Deferred issuance costs Amortization expense (175,312) 59,719 (1,964) 459 (138) (117,236) Some revenues reported in the statement of activities do not represent the collection of current financial resources and, therefore, are not reported as revenues in the governmental funds. Donations of capital assets Property tax revenues Changes to other revenues 23,943 2,313 (135) 26,121 (2,215) (8,779) (1,089) (1,784) (111) (55) (14,033) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds Change in compensated absences Future postemployment health benefit liability Change in landfill liability Pollution remediation liability Net book value of capital asset disposals Change in reservation of fund balances Internal service funds are used by management to charge the costs of certain activities to individual funds. A portion of the net expense of the internal service funds is reported with governmental activities Change in net assets of governmental activities See accompanying notes to financial statements 37 8,292 $ 43,711 PIMA COUNTY, ARIZONA Statement of Net Assets - Proprietary Funds June 30, 2008 (in thousands) Business-type Activities Enterprise Funds Regional Wastewater Other Reclamation Enterprise Department Funds Pima Health System & Services Assets Current assets: Cash and cash equivalents Restricted cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable (net) Inventory Prepaid expense Total current assets Noncurrent assets: Restricted cash and cash equivalents Capital assets: Land and other improvements Buildings and improvements Sewage conveyance system Equipment Less accumulated depreciation Construction in progress Total capital assets (net of accumulated depreciation) Deferred financing costs Total noncurrent assets $ $ 144 1 931 11,390 81 14 55,185 56,850 53,074 287 1,988 28 9,860 3,620 178 125,885 $ Total Enterprise Funds 7,716 $ 17 2,641 13 7 10,394 492 492 7,324 835,401 17,718 908,905 76,550 864 34,375 3,016 5 1,087 1,880 1 16,010 355 1,747 3,980 1,265 3,943 88 1,407 7,870 5,955 1,158 17,229 34,375 8,154 1,270 5,038 2,072 1,408 7,870 5,955 41,228 1,707 (9,171) 7,324 8 104 40,518 1,625 5,842 718 155,831 64,471 689 592 614 33,364 (14,969) 19,601 19,601 771 840 5 3,908 2,321 9,592 83,371 5,842 1,665 155,831 64,471 258 181 689 226,862 258 227,809 15,514 9,462 25,157 41,917 267,380 1,883 311,180 34,749 601 474,897 7,324 482,822 19,601 8,511 791 37,925 5,956 13,732 56,499 22,200 15,835 597,725 791 37,925 5,956 13,732 (464) $ 172 1,414 180 147 558 697 56,949 55,786 601 Net assets Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Regional wastewater Healthcare Unrestricted 53,781 10,596 361,468 580,096 38,459 (348,131) 72,060 714,548 2,401 717,441 601 Total liabilities $ 1,861 12,927 1,138 (1,231) Liabilities Current liabilities: Accounts payable Accrued medical and health care claims Employee compensation Interest payable Due to other funds Due to other governments Deferred revenues Current portion of sewer revenue bonds Current portion of wastewater loans payable Current portion of reported but unpaid losses Current portion of incurred but not reported losses Total current liabilities Noncurrent liabilities: Contracts and notes Other postemployment healthcare benefits Sewer revenue bonds Regional wastewater loans payable Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities 107,190 53,074 448 4,630 959 21,263 3,701 199 191,464 Governmental ActivitiesInternal Service Funds 8,735 347,847 580,096 35,614 (337,729) 72,060 706,623 2,401 709,516 694 Total assets Total net assets 42,624 Exhibit A-7 13,869 48,452 $ 568,021 $ Some amounts reported for business-type activities in the Statement of Net Assets are different because certain internal service fund assets and liabilities are included with business-type activities. Net assets of business-type activities See accompanying notes to financial statements 38 (102) $ 597,623 $ 41,801 PIMA COUNTY, ARIZONA Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2008 (in thousands) Business-type Activities Enterprise Funds Regional Wastewater Reclamation Department Pima Health System & Services Operating revenues: Net patient services Charges for services Other $ Total net operating revenues Operating expenses: Employee compensation Medical claims Operating supplies and services Utilities Sludge and refuse disposal Repair and maintenance Incurred losses Insurance premiums General and administrative Consultants and professional services Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Intergovernmental revenue Investment earnings Sewer connection fees Interest expense Gain/(loss) on disposal of capital assets Amortization of deferred charges Premium tax 289,651 2,329 987 Other Enterprise Funds 74,729 105 $ 10,712 210 289,651 87,770 1,302 45,420 2,207 74,834 10,922 378,723 47,627 39,096 237,926 1,587 400 34,527 11,675 7,398 304 397 386 8,187 6,940 1,602 3,878 234 85,298 237,926 10,078 7,737 1,602 4,498 8,332 1,771 215 289,713 11,184 9,516 24,454 100,288 2,950 624 619 16,803 22,466 11,911 25,288 406,804 3,967 10,227 4,911 2,721 435 2,759 40,253 3,254 (25,454) (5,881) (28,081) 7,374 4,723 2,402 791 3,760 31,037 (6,560) (539) (136) 1,139 28,353 4,393 2,899 6,918 917 5,514 6,822 31,037 (6,653) (534) (136) (5,893) 660 5 (5,893) Income (loss) before contributions and transfers $ 292,967 (93) Total nonoperating revenues Governmental ActivitiesInternal Service Funds Total Enterprise Funds $ $ Exhibit A-8 665 2,106 (206) 30,157 1,900 (5,216) 2,076 9,274 23,438 6,995 (7,632) 2,550 (2,627) 23,510 9,545 (10,259) 20 4,352 (4,358) Capital contributions Transfers in Transfers (out) 72 Change in net assets 4,465 25,700 (5,293) 24,872 9,288 Net assets at beginning of year, as restated 9,404 542,321 21,128 572,853 32,513 15,835 597,725 Net assets at end of year $ 13,869 $ 568,021 $ Some amounts reported for business-type activities in the Statement of Activities are different because a portion of the net expense of certain internal service funds is reported with business-type activities. Change in net assets of business-type activities See accompanying notes to financial statements 39 996 $ 25,868 $ 41,801 PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2008 (in thousands) Regional Wastewater Reclamation Department Pima Health System & Services Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from customers for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments for incurred losses Cash payments to employees for services $ 257 299,344 987 (235,385) (4,270) 21,111 Cash flows from noncapital financing activities: Interest paid on short-term credit Cash transfers out to other funds Loans with other funds Premium tax Intergovernmental revenues (62) (5,893) 4,803 Net cash provided by (used for) noncapital financing activities (1,239) Other Enterprise Funds $ $ (39,822) Net cash provided by (used for) operating activities Exhibit A-9 Total Enterprise Funds 76,216 105 (34,323) (8,869) 100 10,710 224 (2,550) (3,389) (33,018) (10,317) (83,157) 2,183 (17,377) (3,583) (11,879) (6,380) (5,222) 16,000 8,384 (2,603) (87) (636) (915) (5,893) 4,886 447 (2,603) (2,645) 447 111 $ (87) (636) 1,750 83 1,197 Cash flows from capital and related financing activities: Proceeds from issuance of bonds and loans Principal paid on bonds and loans Interest paid on bonds and loans Sewer connection fees Proceeds from sale or transfer of capital assets Proceeds from intergovernmental contract Purchase of capital assets (118) 1,066 (67,322) Net cash provided by (used for) capital and related financing activities (118) 19,529 75,000 (13,071) (6,351) 30,207 357 386,270 1,316 (272,258) (16,528) Governmental ActivitiesInternal Service Funds $ 45,420 75,000 (13,071) (6,351) 30,207 39 1,066 (67,440) (4,277) 39 19,450 (4,061) 39 216 Cash flows from investing activities: Interest received on cash and investments 2,324 3,881 693 6,898 2,268 Net cash provided by investing activities 2,324 3,881 693 6,898 2,268 Net increase (decrease) in cash and cash equivalents 22,078 24,718 (7,093) 39,703 7,038 Cash and cash equivalents at beginning of year 20,546 85,698 14,809 121,053 46,743 Cash and cash equivalents at end of year $ 42,624 $ 110,416 $ (Continued) See accompanying notes to financial statements 40 7,716 $ 160,756 $ 53,781 PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2008 (in thousands) Exhibit A-9.1 (Continued) Reconciliation of operating income (loss) to net cash provided by (used for) operating activities Pima Health System & Services $ 3,254 Operating income (loss) Regional Wastewater Reclamation Department $ (25,454) Other Enterprise Funds $ (5,881) Total Enterprise Funds $ (28,081) Governmental ActivitiesInternal Service Funds $ 7,374 Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Due from other governments Inventory and other assets Prepaid expenses Increase (decrease) in liabilities: Accounts payable Due to other governments Reported but unpaid losses Incurred but not reported losses Other current liabilities 215 Net cash provided by (used for) operating activities $ 24,454 619 25,288 3,662 1,964 7 (3) (650) 2,137 (508) 11 12 50 3,024 4,101 (501) 58 8,706 1,880 (1,394) 6 (337) 5 6,975 1,891 1,426 1,509 310 3,245 21,111 $ 111 $ (5,222) $ 16,000 2,759 64 (88) (101) 97 (381) 5 (3,517) 1,865 307 $ 8,384 Noncash investing, capital and noncapital financing activities during the year ended June 30, 2008: Pima Health System and Services received equipment worth $91. Of this amount, $19 was transferred from construction in progress and $72 was a capital contribution. Pima Health System and Services disposed of capital assets with a net book value of $1. Regional Wastewater Reclamation Department Enterprise Fund disposed of capital assets with a net book value of $539. Regional Wastewater Reclamation Department Enterprise Fund received contributed developer-built conveyance systems with estimated fair values totaling $23,667. These contributions were recorded as increases to capital assets and capital contributions. Regional Wastewater Reclamation Department Enterprise Fund recorded a Board of Supervisor approved connection fee credit agreement of $830. This credit was recorded as an increase to deferred revenue and a decrease to capital contributions. Regional Wastewater Reclamation Department Enterprise Fund transferred in capital assets with a net book value of $601 from the County's general government. Other Enterprise Funds had a gain of $5 on the disposal of capital assets with a net book value of $34. Internal Service Funds disposed of capital assets with a net book value of $206. Internal Service Funds transferred in capital assets with a net book value of $20 from the County's general government. Internal Service Funds transferred out capital assets with a net book value of $6 to the County's general government. See accompanying notes to financial statements 41 PIMA COUNTY, ARIZONA Statement of Fiduciary Net Assets - Fiduciary Funds June 30, 2008 (in thousands) Investment Trust Funds Assets Cash and cash equivalents Interest receivable Due from other governments Total assets $ 314,745 584 Agency Funds $ 75,004 1,809 $ 315,329 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities Net Assets Held in trust for pool participants Exhibit A-10 $ 315,329 See accompanying notes to financial statements 42 $ 76,813 $ 4,751 46,048 26,014 $ 76,813 PIMA COUNTY, ARIZONA Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended June 30, 2008 (in thousands) Exhibit A-11 Investment Trust Funds Additions Contributions from participants Total contributions $ Investment earnings Total investment earnings 12,359 12,359 Total additions 2,830,426 Deductions Distributions to participants 2,813,849 Total deductions 2,813,849 Change in net assets 16,577 Net assets held in trust July 1, 2007 Net assets held in trust June 30, 2008 See accompanying notes to financial statements 43 2,818,067 2,818,067 298,752 $ 315,329 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 1: Summary of Significant Accounting Policies The accounting policies of Pima County (County) conform to U.S. generally accepted accounting principles (GAAP) applicable to governmental units as promulgated by the Governmental Accounting Standards Board (GASB) and the regulatory requirements of the State of Arizona. A summary of the County’s significant accounting policies follows. During the year ended June 30, 2008, Pima County implemented GASB Statements, Nos. 45, 48 and 50, and early implemented GASB Statement No. 49. GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions, requires systematic measurement and recognition of other postemployment benefits’ (OPEB) cost over employees’ years of service and provides information about actuarial accrued liabilities associated with OPEB. Although OPEB is not required to be funded, whether and to what extent progress is being made in funding the liabilities must be disclosed. As a result of the implementation of GASB 45, the County has recorded a net OPEB obligation offset by OPEB expense in the financial statements, related to the postemployment healthcare benefit participation by County retirees and their beneficiaries in Pima County’s healthcare benefit plan. Further information regarding this measurement and disclosure is available in Note 10. GASB Statement No. 50, Pensions Disclosure (an amendment of GASB Statements No. 25 and No. 27) requires governmental employers to present certain additional pension disclosures in the notes and additional required supplementary information. The provisions for GASB Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity transfers of Assets and Future Revenues require that the County disclose pledged revenue that is committed to collateralize or secure debt. Further information is available in Note 7. The provisions for GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations require the County to disclose current or potential detrimental effects of existing pollution. Further information is available in Note 6. A. Reporting Entity The County is a general-purpose local government that is governed by a separately elected board of Pima County supervisors. The accompanying financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered financially accountable. Blended component units, although legally separate entities, are, in substance, part of the County’s operations. Therefore, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize they are legally separate from the County. Each blended and discretely presented component unit discussed below has a June 30 yearend. The Pima County Stadium District, a legally separate entity, was formed to promote and establish major league baseball spring training in Pima County. The Pima County Board of Supervisors is the Board of Directors of the District. Acting in the capacity of the Board of Directors, the Pima County Board of Supervisors is able to impose its will on the District. The Board of Directors levies the car rental surcharge rates and the recreation vehicle (RV) park tax for the District. The District is reported 44 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) as a special revenue fund (blended component unit) in these financial statements. Complete financial statements for the District can be obtained from the Pima County Department of Finance and Risk Management located at 130 West Congress Street, Tucson, Arizona 85701. The Pima County Library District was established in 1986 when legislation allowed full taxing authority and the ability to enter into agreements with other jurisdictions for the provision of library services. The Pima County Board of Supervisors is the Board of Directors of the District. The Library District is reported as a special revenue fund (blended component unit) in these financial statements. Separate financial statements for the District are not available. The Pima County Regional Flood Control District was established in 1978. The District is responsible for floodplain management activities for the unincorporated areas of Pima County (except national forests, parks, monuments and Native American Nations), the City of South Tucson, and the Town of Sahuarita. The Pima County Board of Supervisors is the Board of Directors for the Flood Control District. The Regional Flood Control District is reported as a special revenue fund (blended component unit) in these financial statements. Separate financial statements for the District are not available. The Southwestern Fair Commission, Inc. (SFC) is a nonprofit corporation, which manages and maintains the fairgrounds owned by the County and conducts an annual fair and other events at the fairgrounds. The Commission’s members are appointed and can be removed at any time by the Pima County Board of Supervisors. Based on these factors, and because SFC does not provide services entirely, or almost entirely to the County, but rather to the general citizenry, SFC is reported as a separate component unit (discrete presentation) in these financial statements. Complete financial statements for SFC can be obtained from the Pima County Department of Finance and Risk Management located at 130 West Congress Street, Tucson, Arizona 85701. Related Organization The Industrial Authority of Pima County (Authority) is a legally separate entity that was created to promote economic development and the development of affordable housing. The Authority fulfills its function through the issuance of tax-exempt bonds. The County Board of Supervisors appoints the Authority’s Board of Directors. The Authority’s operations are completely separate from the County and the County is not financially accountable for the Authority. Therefore, the financial activities of the Authority have not been included in the accompanying financial statements. B. Basis of Accounting Primary government: The government-wide, proprietary funds and fiduciary funds financial statements are presented using the economic resources measurement focus and the accrual basis of accounting with the exception of agency funds, which have no measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental funds in the fund-based financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, 45 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) revenues are recognized when measurable and available. The County considers all revenues reported in the government funds to be available if the revenues are collected within 30 days after year-end. Revenues that are collected after 30 days are reported as deferred revenues. The County’s major revenue sources that are susceptible to accrual are property taxes, intergovernmental and charges for services. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital lease agreements are reported as other financing sources. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. The County applies grant resources to such programs before using general revenues. The County’s business-type activities and enterprise funds follow FASB Statements and Interpretations issued on or before November 30, 1989; Accounting Principles Board Opinions; and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has chosen the option not to follow FASB statements and interpretations issued after November 30, 1989. Discretely presented component unit: SFC’s financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. The Commission’s policy is to apply all FASB pronouncements issued after November 30, 1989. C. Basis of Presentation The basic financial statements include both government-wide statements and fund-based financial statements. The government-wide statements focus on the County as a whole, while the fund-based financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements provide information about the primary government and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business-type activities of the County and between the County and its discretely presented component unit. Governmental activities are financed primarily through taxes and intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County’s governmental activities and segment of its business-type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The County does not allocate indirect expenses to programs or functions. Program revenues include: 46 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) ƒ ƒ ƒ Charges for services (fines and forfeitures, licenses and permits, and special assessments) Operating grants and contributions Capital grants and contributions Revenues that are not classified as program revenues, including internally dedicated resources and all taxes, are reported as general revenues. The net effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double counting of internal activities. Fund-based financial statements provide information about the County’s funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary and fiduciary fund categories. The emphasis of fund-based financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. Fiduciary funds are aggregated and reported by fund type. Proprietary funds are financed mainly by fees and charges received from users of the services provided by the funds’ operations. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The County reports the following major governmental funds: The General Fund is the County’s primary operating fund. It accounts for all financial resources of the general government, except for those required to be accounted for in another fund. The Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities, other than those financed by proprietary funds. The County reports the following major enterprise funds: Pima Health System and Services (PHS&S) provides payment for health care services including inpatient hospital care and outpatient clinical care for medical and psychiatric problems, indigent health care under the Arizona Health Care Cost Containment System (AHCCCS), an alternative to Medicaid, home health services and long-term nursing care. Regional Wastewater Reclamation Department (RWRD) accounts for the management and operation of wastewater treatment and water pollution control programs. The County reports the following fund types: Internal Service Funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the County, or to other governmental units, on a costreimbursement basis. These funds account for fleet maintenance and operation, insurance, graphic services and telecommunications services. Investment Trust Funds account for assets held by the County Treasurer in an external investment pool and individual investment accounts for the benefit of outside jurisdictions. 47 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) Agency Funds account for the assets, held by the County as an agent, for individuals, private organizations or other governmental units. The agency fund is custodial in nature and does not present results of operations. D. Cash and Investments Primary government: For purposes of its statements of cash flows, the County considers only those highly liquid investments, with a maturity period of 3 months or less when purchased, to be cash equivalents. All investments are stated at fair value. If an individual fund has a deficit balance in the amount on deposit with the County Treasurer at yearend, that balance is reclassified as an amount due to other funds. Discretely presented component unit: SFC’s cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. E. Inventories and Prepaids The County accounts for its inventories in the Health and Animal Control Fund using the purchase method. Inventories of the Health and Animal Control Fund consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to indicate that they do not constitute “available spendable resources.” These inventories are stated at cost using the first-in, first-out method or average cost method. During the current fiscal year, Transportation transitioned from the purchase method to the consumption method eliminating the need to report a change in inventory reserve. Purchases are recorded as inventory and expensed when used. Amounts on hand at year-end are shown on the balance sheet as an asset and are offset by a fund balance reserve to indicate that they do not constitute “available spendable resources.” Inventories in Transportation are valued at lower of cost or market, cost being determined using the moving average method. Inventories in the government-wide and proprietary funds’ financial statements are recorded as assets when purchased and expensed when consumed. Inventories of Pima Health System and Services, an enterprise fund, are valued at the lower of cost or market, cost being determined on the first-in, first-out method. Inventories of RWRD, an enterprise fund, are valued at lower of cost or market, cost being determined using the moving average method. Inventories of Fleet Services, an internal service fund, are valued at lower of cost or market, cost being determined using the moving average method. Prepaid expenses/expenditures are accounted for using the consumption method, except for the School Reserve Fund reported as an Other Governmental Fund, which uses the purchase method. 48 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets are reported at actual cost or estimated historical cost, if historical records are not available. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds, depreciation methods and estimated useful lives of capital assets reported in the government-wide statements and proprietary funds are as follows (excluding component unit): Capitalization Threshold Depreciation Method Estimated Useful Life Land All N/A N/A Land improvements All Straight Line 20 - 30 Years $100 Straight Line 10 - 50 Years Equipment $5 Straight Line 4 - 25 Years Fleet service vehicles $5 Units of Production based on number of hours or miles 5 - 15 Years $100 Straight Line 10 - 50 Years Buildings and building improvements Infrastructure Discretely presented component unit: SFC capital assets are reported at actual cost. Depreciation is provided by the straight-line method over the assets’ estimated useful life, which range from 3 to 40 years. H. Investment Earnings Investment earnings are composed of interest, dividends and net changes in the fair value of applicable investments. I. Compensated Absences Compensated absences consist of vacation leave and a calculated amount of sick leave earned by employees based on services already rendered. 49 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) Employees may accumulate up to 240 hours of vacation depending upon years of service, but any vacation hours in excess of the maximum amount that are unused at their year-end are forfeited. Upon termination of employment, all unused and unforfeited vacation benefits are paid to employees. Accordingly, vacation benefits are accrued as a liability in the financial statements in Employee Compensation. Employees may accumulate up to 1920 hours of sick leave. Generally, sick leave benefits provide for ordinary sick pay and are cumulative but are forfeited upon termination of employment. Sick leave benefits do not vest with employees; however employees who are eligible to retire from County service into the Arizona State Retirement System, Public Safety Personnel Retirement System, or Corrections Officer Retirement Plan may request sick leave be converted to annual leave, on a predetermined conversion basis. An estimate of those retirement payouts is accrued as a liability in the government-wide financial statements in Employee Compensation. Note 2: Net Asset Beginning Balances Restated The beginning net assets for Governmental Activities were restated due to the addition of Transportation dedicated roadways and land parcels. These dedicated roadways and land parcels were not reported in prior fiscal years. The following summarizes the restatement of net assets: Governmental Activities Net assets – June 30, 2007, as previously reported Infrastructure Land Net assets – July 1, 2007, as restated $ $ 999,451 57,843 18,739 1,076,033 In addition, due to restructuring of the Regional Wastewater Reclamation Department Enterprise Fund sewer conveyance assets, beginning net asset balances were restated as follows: Net assets – June 30, 2007, as previously reported Sewer conveyance system Net assets – July 1, 2007, as restated 50 Business-type Activities Regional Wastewater Reclamation Department $ $ $ 572,462 (707) 571,755 $ 543,028 (707) 542,321 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 3: Cash and Investments Primary Government The County’s cash and investment policies are governed by State statutes and by bond covenants. The County Treasurer is authorized to invest public monies in the State Treasurer’s Investment Pool; interest bearing savings accounts, certificates of deposit and repurchase agreements in eligible depositories; bonds or other obligations issued or guaranteed by the United States government or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds; specified commercial paper, bonds, debentures and notes issued by corporations organized and doing business in the United States; and bonds of the State of Arizona or any of its counties, cities, towns, or school districts as specified by statute. In addition, the County Treasurer may invest trust funds in fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk—The State statutes have the following requirements for credit risk: 1. Commercial paper must be rated P1 by Moody’s Investors Service or A1 or better by Standard and Poor’s rating service. 2. Corporate bonds, debentures and notes must be rated A or better by Moody’s Investors Service or Standard and Poor’s rating service. 3. Fixed income securities must carry one of the two highest ratings by Moody’s Investors Service and Standard and Poor’s rating service. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk—Statutes require collateral for demand deposits, certificates of deposit and repurchase agreements at 101 percent of all deposits not covered by federal depository insurance. Concentration of credit risk—Statutes do not include any requirements for concentration of credit risk. Interest rate risk—Statutes require that public monies invested in securities and deposits have a maximum maturity of 5 years and that public operating fund monies invested in securities and deposits have a maximum maturity of 3 years. Investments in repurchase agreements must have a maximum maturity of 180 days. Foreign currency risk—Statutes do not allow foreign investments. Deposits—At June 30, 2008, the carrying amount of the County’s deposits was $16,506 and the bank balance was $36,096. Custodial credit risk—Custodial credit risk is the risk that the County will not be able to recover its deposits if a financial institution fails. The County does not have a formal policy with respect to custodial credit risk. As of June 30, 2008, $3,775 of the County’s bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. 51 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 3: Cash and Investments (continued) Investments—At June 30, 2008, the County’s investments consisted of $271,549 invested in marketable securities and $639,977 invested in the State Treasurer’s Investment Pool. Cash from the County and from externally legally separate governments are pooled to purchase the investments in marketable securities and the State Treasurer’s Pool. The State Board of Investment provides oversight for the State Treasurer’s pools. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares and the participant’s shares are not identified with specific investments. Credit risk—Credit risk is the risk that an issuer or counterparty to an investment will not fulfill its obligations. The County does not have a formal investment policy with respect to credit risk. At June 30, 2008, credit risk for the County’s investments was as follows: Investment Type Commercial paper Corporate bonds Federal Farm Credit Bank Federal Home Loan Bank Fannie Mae (Federal National Mortgage Association) Freddie Mac (Federal Home Loan Mortgage Corp) U. S. Treasury money market Fund Tri-party Repurchase agreement State Treasurer Investment Pool Total Rating Rating Agency A1/P1 A/A1 AAA/Aaa AAA/Aaa AA-/Aa2 AAA/Aaa AAA/Aaa Unrated S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's Amount $ Unrated $ 39,929 84,024 18,536 35,892 25,498 19,616 3,717 1,090 639,977 868,279 Custodial credit risk—For an investment, custodial risk is the risk that, in the event of the counterparty’s failure, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County has no formal policy with respect to custodial credit risk. Of the County’s $911,526 of investments, $267,832, consisting of the commercial paper, corporate bonds, Federal Farm Credit, Federal Home Loan Bank, Fannie Mae and Freddie Mac discount notes, U.S. Treasury notes and tri-party repurchase agreement, is uninsured and held by a counterparty in the County’s name in book form. An additional $3,717 in a U.S. Treasury money market fund is held by a counterparty as trustee. Concentration of credit risk—The County has no formal policy with respect to limiting the amount the Treasurer may invest in any one issuer. The County’s exposure as of June 30, 2008 is less than 5% per issuer. Interest rate risk—Interest rate risk is the risk that changes in interest rates will adversely affect an investment’s fair value. The County does not have a formal investment policy with respect to interest rate risk. 52 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 3: Cash and Investments (continued) As of June 30, 2008, the County had the following investments: Investment Type State Treasurer Investment Pool 5 State Treasurer Investment Pool 7 Commercial paper Corporate bonds Federal Farm Credit Bank Federal Home Loan Bank Fannie Mae (Federal National Mortgage Association) Freddie Mac (Federal Home Loan Mortgage Corp) U.S. Treasury U.S. Treasury money market fund Tri-party repurchase agreement Total Weighted Average Maturity (Years) 0.12 0.06 0.08 1.72 2.62 1.27 1.13 2.43 2.12 0.05 0.00 Amount $ 530,676 109,301 39,929 84,024 18,536 35,892 25,498 19,616 43,247 3,717 1,090 $ 911,526 A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Assets follows: Cash on Amount of Amount of Deposits Investments Total Hand Cash, deposits and investments: $ 83 $ 16,506 $ 911,526 $928,115 Agency Funds Totals Governmental Business-type Investment Activities Activities Trust Funds Statement of Net Assets: Cash and cash equivalents Restricted cash and cash equivalents $ 376,539 1,071 $ 107,190 53,566 $ 314,745 $ 75,004 $873,478 54,637 Total $ 377,610 $ 160,756 $ 314,745 $ 75,004 $928,115 County Treasurer’s Investment Pool - Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The County Treasurer has a fiduciary responsibility to administer those and the County monies under her stewardship. The County Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the County Treasurer determines the fair value of those pooled investments annually at June 30. The County Treasurer’s Investment Pool is not registered with the Securities and Exchange Commission as an investment company and there is no regulatory oversight of its operations. The structure of the Pool does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the value of the participants’ investments. The County Treasurer allocates interest earnings to each of the Pool’s participants. 53 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 3: Cash and Investments (continued) The Pool’s assets are subject to applicable risks as discussed above and consist of the following: Principal Interest Rates Commercial paper $40,000 2.1-2.4% Corporate bonds 82,433 3.4-6.3% Federal Farm Credit Bank 17,500 5.0-5.4% Federal Home Loan Bank 35,000 2.2-5.3% Fannie Mae (Federal National Mortgage Association) 25,155 2.0-4.6% Freddie Mac (Federal Home Loan Mortgage Corp) 19,200 3.3-4.1% U.S. Treasury 42,050 2.8-4.8% Tri-party repurchase agreement 1,090 1.7% State Treasurer Investment Pool 359,249 N/A Interest Receivable 522 N/A Total assets Less: Reduction to Pool's assets- warrants payable Maturities Fair Value 07/08-08/08 $ 39,929 08/08-04/13 84,024 09/10-07/11 18,536 08/08-08/10 35,892 07/08-05/11 25,498 10/10-02/11 19,616 10/08-02/13 43,247 07/08 1,090 N/A 359,249 N/A 522 627,603 (7,386) Total $ 620,217 A condensed statement of the investment pool’s net assets and changes in net assets follows: Statement of Net Assets Assets held in trust for: Internal participants $ 414,251 External Participants 205,966 Total liabilities 620,217 Total net assets held in trust $ Statement of Changes in Net Assets Total additions Total deductions 620,217 $ 7,960,413 (7,906,718) Net increase Net assets held in trust: July 1, 2007 53,695 566,522 June 30, 2008 $ 620,217 Discretely Presented Component Unit Southwestern Fair Commission—At June 30, 2008, the commission’s cash and cash equivalents of $1,805 consisted of deposits with financial institutions. Of the total balance, $1,400 was exposed to custodial credit risk because it was uninsured and uncollateralized. 54 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 4: Due from Other Governments Governmental activities: Capital Projects Fund General Fund Federal government: Grants and contributions State of Arizona: Taxes and shared revenues Grants and contributions City of Tucson: Reimbursement for services Due from other governments: Reimbursement for services Total due from other governments fund based statements $ 166 $ 22,800 $ 455 Other Governmental Funds $ 1,327 Internal Service Funds 8,055 $ 8,415 2,491 $ 38 832 187 2,380 454 170 20,247 $ 180 $ 4,200 $ 8,676 32,542 2,501 10 1,561 24,714 Total Governmental Activities 2,431 3,191 $ 49,341 Business-type activities: Regional Wastewater Reclamation Department Pima Health System and Services Federal government: Grants and contributions Reimbursement for services State of Arizona: Grants and contributions Total due from other Governments $ $ $ 286 28 286 645 645 931 55 Business-type Activities Total $ 28 28 $ $ 959 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 5: Capital Assets Capital asset activity for the year ended June 30, 2008, was as follows: Balance July 1, 2007 (as restated) Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated $ Capital assets being depreciated: Buildings and improvements Infrastructure Equipment Total capital assets being depreciated $ 476,934 980,568 97,436 1,554,938 Less accumulated depreciation for: Buildings and improvements Infrastructure Equipment Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net 276,126 109,307 385,433 Increases $ $ Capital assets being depreciated: Buildings and improvements Infrastructure Equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Infrastructure Equipment Total accumulated depreciation Total capital assets being depreciated, net Business-type activities capital assets, net $ $ $ 22,611 87,634 15,483 125,728 (95,260) (95,260) 303,646 90,098 393,744 (321) (321) (5,676) (6,318) 499,224 1,067,881 107,243 1,674,348 (121,326) (425,825) (57,876) (605,027) (11,570) (32,944) (9,854) (54,368) 5,142 5,184 949,911 71,360 (1,134) 1,335,344 $ Balance July 1, 2007 (as restated) Business-type activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated 27,520 76,051 103,571 Balance June 30, 2008 Decreases 9,695 35,637 45,332 174,931 $ 901 56,720 57,621 6,415 32,083 18,984 57,482 (115,684) (199,825) (8,306) (323,815) (11,726) (11,015) (2,547) (25,288) 56 $ Increases 355,260 548,573 20,252 924,085 600,270 645,602 42 $ 32,194 89,815 (96,394) (132,854) (458,769) (62,588) (654,211) 1,020,137 $ Balance June 30, 2008 Decreases $ $ (20,297) (20,297) 10,596 72,060 82,656 (207) (560) (777) (1,544) 361,468 580,096 38,459 980,023 84 258 630 972 $ 1,413,881 (572) (20,869) (127,326) (210,582) (10,223) (348,131) $ 631,892 714,548 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 5: Capital Assets (continued) Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highway and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Internal service funds Total governmental activities depreciation expense $ 7,252 9,654 28,342 436 672 5 4,525 723 2,759 54,368 $ Business-type activities: Pima Health System & Services Parking Garages Regional Wastewater Reclamation Department Development Services Total business-type activities depreciation expense $ 215 336 24,454 283 25,288 $ Balance July 1, 2007 Discretely presented component units: Southwestern Fair Commission (SFC): Capital assets not being depreciated: Construction in progress Total capital assets not being depreciated $ 3 3 Capital assets being depreciated: Buildings and improvements Equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Equipment Total accumulated depreciation $ Balance June 30, 2008 Decreases 38 38 $ (3) (3) $ 38 38 3,906 1,773 5,679 113 233 346 (9) (9) 4,019 1,997 6,016 (2,308) (1,298) (3,606) (121) (114) (235) 9 9 (2,429) (1,403) (3,832) 2,073 111 Total capital assets being depreciated, net SFC capital assets, net Increases $ 2,076 57 $ 149 2,184 $ (3) $ 2,222 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 6: Claims, Judgments and Risk Management Risk Management and Claims Liability The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; medical malpractice; environmental claims; and natural disasters. Claims against the County are accounted for in the Self Insurance Trust Fund (the Fund), an internal service fund. Annually, an actuarial evaluation is performed to determine the County’s anticipated losses except for environmental, unemployment and dental losses. Environmental losses are based on reported claims and the County risk manager’s knowledge and experience. Unemployment and dental losses are based on claims that have been submitted but not yet paid by the Fund. Losses accounted for include reported and paid, reported but unpaid, and incurred but not reported. All liabilities of the Fund except for environmental, unemployment and dental losses are reported at their present value using an expected future investment yield assumption of four percent. The Fund is liable for any single general or automobile liability claim up to $2,000,000 per occurrence, any workers’ compensation claim up to $750,000 per occurrence or any medical malpractice claims in aggregate up to $5,000,000 in any policy year. The County purchases commercial insurance for claims in excess of coverage provided by the Fund and for some other risks of loss. Settled claims have not exceeded insurance coverage in any of the last three fiscal years. Payment of unemployment and dental claims is fully self-funded. Payment of environmental claims is generally self-funded, although some claims filed could result in past insurers being liable for such losses. All of the County’s departments participate in the Fund. With the exception of environmental, dental, and unemployment losses, charges are based on actuarial estimates of the amounts needed to pay prior and current-year claims. Charges for environmental losses are based on historical experience. Charges for dental and unemployment losses are based on actual claims paid. The claims liability of $31,205 reported in the Fund at June 30, 2008, is based on estimates of the ultimate cost of claims that have been reported but not settled and of claims that have been incurred but not reported. The ultimate cost of claims includes incremental claim adjustment expenses that have been allocated to specific claims, as well as salvage and subrogation. No other claim adjustment expenses have been included. Claims liability - beginning Current-year claims and changes in estimates Claims payment 2008 $ 32,857 10,227 (11,879) 2007 $ 35,508 8,118 (10,769) Claims liability - ending $ 31,205 $ 32,857 58 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 6: Claims, Judgments and Risk Management (continued) Litigation Pima County is a defendant in a number of court actions. In the opinion of County management, the final disposition of these actions, if unfavorable, will not have a material effect upon the County's financial statements. Pollution Remediation - El Camino del Cerro Site The County has estimated and reported an environmental liability of $1,784 in the government-wide financial statements for governmental activities (in noncurrent liabilities). Remediation efforts are currently underway at the El Camino del Cerro site which is approximately bordered by the Santa Cruz River on the west, Interstate 10 on the east and north of El Camino del Cerro Road. The groundwater contamination is suggested to resonate from the municipal and solid waste landfill operated on the site from 1973 to 1977. In communication with the Arizona Department of Environmental Quality, the County has begun remediation efforts that will include a groundwater pump-and-treat system. The estimated liability was calculated based upon the expected future outlays associated with the cost of one to three pump-and-treat systems for one to two years. The estimate of one pump-and-treat system for one year was considered to be a better estimate than any other amount. There is potential for changes due to increased costs associated with sewage disposal costs, construction costs for extraction wells and/or changes in the estimated extent of contamination. There are no estimated recoveries at this time. 59 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2008. Balance July 1, 2007 Balance July 1, 2008 Due within 1 year $ 348,335 1,208 349,543 $ 33,660 99 33,759 745 725 725 Additions Reductions Governmental activities: General obligation bonds Plus unamortized deferred amount Total general obligation bonds $ 289,590 560 290,150 $100,000 714 100,714 $ 1,470 Flood control bonds 41,255 66 41,321 136,400 141 136,541 25,000 31 25,031 11,745 26 11,771 149,655 146 149,801 12,365 29 12,394 30,320 1,411 31,731 50,000 1,219 51,219 1,244 94 1,338 79,076 2,536 81,612 21,545 500 22,045 3,714 2,714 1,000 1,000 26,550 (1,914) 100 24,736 312 312 1,870 (191) 146 1,825 24,680 (1,723) 266 23,223 1,965 (191) 123 1,897 28,450 312 4,539 24,223 2,897 Reported but unpaid losses (Note 6) Incurred but not reported losses (Note 6) 22,939 9,918 8,362 1,865 11,879 19,422 11,783 3,908 2,321 Landfill closure and post-closure care costs (Note 9) 17,330 1,089 18,419 Pollution remediation (Note 6) 1,784 1,784 566 Future postemployment health benefit liability (Note 10) 14,147 9,845 5,129 Transportation revenue bonds Plus unamortized deferred amount Total transportation revenue bonds Certificates of participation Plus unamortized deferred amount Total certificates of participation Loans and Leases: Transportation loans payable Capital leases payable: Jail capital lease Less unamortized deferred amount Other capital leases Total capital leases Total loans and leases Total governmental activities long-term liabilities $ 538,529 60 $204,523 4,302 $ 75,895 $ 667,157 $ 83,744 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) Balance July 1, 2007 Additions Reductions Balance July 1, 2008 Due within 1 year $ $ Business-type activities: Sewer revenue bonds Less unamortized deferred amount Total revenue bonds payable $ Regional Wastewater Reclamation Department (RWRD) loans payable Less unamortized deferred amount Total loans payable 97,290 (2,934) 94,356 $ $ 76,293 (182) 76,111 5,280 Contracts and notes Future postemployment health benefit liability (Note 10) Total business-type activities long-term liabilities 75,000 1,281 76,281 $ 175,747 $ 7,350 (414) 6,936 164,940 (1,239) 163,701 5,721 (36) 5,685 70,572 (146) 70,426 1,412 850 5,842 2,634 380 2,254 80,327 $ 13,851 $ 242,223 7,870 7,870 5,955 5,955 589 $ 14,414 GENERAL OBLIGATION BONDS OUTSTANDING Governmental Activities (Payments made from property tax revenues of the Debt Service Fund) General obligation bonds payable at June 30, 2008, consisted of the outstanding general obligation bonds presented below. Of the total amounts originally authorized, $20,541 from the May 20, 1997, $306,096 from the May 18, 2004, and $52,044 from the May 16, 2006 bond election remain unissued. The following table presents amounts outstanding by issue. Issue Amount Issue Series of 1998 $ 42,420 Series of 1999 50,000 Series of 2000 50,000 Series of 2001 Refunding 17,835 Series of 2002 20,000 Series of 2003 50,000 Series of 2004 65,000 Series of 2005 65,000 Series of 2007 95,000 Series of 2008 100,000 G.O. bonds outstanding Plus unamortized deferred amount: Interest Rates 4.50 - 4.60% 5.00 - 5.07% 4.00 - 5.00% 5.00% 4.25 - 4.50% 3.50 - 4.25% 3.00 - 5.00% 3.50 - 5.00% 3.00 - 4.50% 3.00 - 4.00% Maturities 2009-13 2009-10 2009-14 2009 2009-16 2009-17 2009-19 2009-20 2009-21 2009-22 Total G.O. bonds outstanding 61 Outstanding June 30, 2008 $ 11,720 6,615 18,000 375 7,000 33,850 47,145 49,265 84,365 90,000 348,335 1,208 $ 349,543 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details general obligation bond debt service requirements to maturity at June 30, 2008. Year Ending June 30, 2009 2010 2011 2012 2013 2014 - 2018 2019 - 2022 Total Principal $ 33,660 28,580 26,240 27,105 28,005 125,330 79,415 $348,335 Interest $14,351 12,954 11,723 10,599 9,424 30,038 6,778 $95,867 ADVANCED REFUNDINGS OF GENERAL OBLIGATION BONDS In prior years, the County defeased certain General Obligation Bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liability for these defeased bonds are not included in the County’s financial statements. At June 30, 2008, the following outstanding bonds were considered defeased: Outstanding June 30, 2008 Issue 1979 General Obligation Refunding Bonds Series of 1999 $ $ 33 5,785 FLOOD CONTROL REFUNDING BONDS OUTSTANDING Governmental Activities (Payments made from property tax revenues of the Debt Service Fund of the District) The Pima County Regional Flood Control District outstanding bonds payable at June 30, 2008 is presented below. Issue Series 2001 Refunding Issue Amount $ 4,585 Interest Rates Maturities 4.20% 2009 62 Outstanding June 30, 2008 $ 725 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details flood control bond debt service requirements to maturity at June 30, 2008. Year Ending June 30, 2009 Total Principal $ 725 Interest $ 30 $ $ 725 30 TRANSPORTATION BONDS AND LOANS PAYABLE Governmental Activities (Payments made from street and highway revenues) Pima County transportation revenue bonds of 1998 were issued to provide monies to construct improvements to the County’s streets and highways. Of the total amount originally authorized, $122,800 from the November 4, 1997 bond election remains unissued. Issue Series of 2002 Series of 2003 Series of 2005 Series of 2007 Series of 2008 Issue Interest Amount Rates Maturities $55,000 4.13 - 4.38% 2009-12 35,000 3.38 - 4.38% 2009-18 51,200 3.50 - 5.00% 2009-20 21,000 3.25 - 4.75% 2009-22 25,000 3.00 - 4.50% 2009-22 Transportation bonds outstanding Plus unamortized deferred amount: Total transportation bonds outstanding Outstanding June 30, 2008 $ 24,855 27,600 51,200 21,000 25,000 149,655 146 $ 149,801 The following schedule details transportation bond debt service requirements to maturity at June 30, 2008. Year Ending June 30, 2009 2010 2011 2012 2013 2014 - 2018 2019 - 2022 Total Principal 12,365 12,870 13,430 14,015 9,970 57,160 29,845 $ 149,655 $ 63 Interest 6,147 5,652 5,091 4,503 3,912 13,098 2,452 $ 40,855 $ PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) During the fiscal year ended June 30, 2006, Pima County Transportation Department entered into a loan agreement to provide funds for roadway improvements of Alvernon Way. Interest on the Alvernon HELP loan is calculated and paid on an annual basis. Issue Amount $ 4,836 Issue 2006 HELP Loan - Alvernon Interest Rate 3.06% Maturities 2009 Total transportation loan payable Outstanding June 30, 2008 $ 1,000 $ 1,000 The following schedule details transportation loans debt service requirements to maturity at June 30, 2008. Year Ending June 30, Principal Interest 2009 $ 1,000 $ 61 $ 1,000 $ 61 Total Pima County has pledged future highway user revenues, net of specified operating expenses, to repay $149,655 in transportation revenue bonds issued between 2002 and 2008, and $1,000 in a transportation HELP loan issued in 2006. Proceeds from the bonds and loans provided financing for construction of various highways and streets within Pima County. The bonds and loans are payable from net highway user revenues and are payable through 2022. Annual principal and interest payments on the bonds are expected to require approximately 78 percent of net revenues. The annual principal and interest payments on the loan are expected to require approximately 9 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $190,510. Total principal and interest remaining to be paid on the loan is $1,061. Principal and interest paid for bonds and the loan in the current year and total customer net revenues were $17,734, $2,828 and $21,325, respectively. CERTIFICATES OF PARTICIPATION Governmental Activities (Payments made from General Fund revenues) Certificates of Participation represent proportionate interests in semiannual lease payments. The County’s obligation to make lease payments is subject to annual appropriations being made by the County for that purpose. On May 1, 2007, the County issued Certificates of Participation Series 2007A for $28,765 to finance the acquisition of and improvements to a 22-story office tower located in downtown Tucson, and Taxable Series 2007-B for $1,555 to acquire and construct replacement facilities for the Pima County Community Services Department. On June 26, 2008, the County issued Certificates of Participation Series 2008 for $50,000 to finance capital costs for public infrastructure of the County, including expansion and upgrades to the County’s sewer treatment system and major road corridors. 64 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details outstanding Certificates of Participation payable at June 30, 2008. Issue Series of 2007 A Justice Building Project Series of 2007-B Justice Building Project - Taxable Series of 2008 Issue Interest Amount Rates Maturities $ 28,765 4.00 - 5.00% 2009-22 1,555 5.04% 2009 50,000 5.00% 2009-11 Certificates of participation outstanding Plus unamortized deferred amount: Total certificates of participation outstanding Outstanding June 30, 2008 $ 28,765 311 50,000 79,076 2,536 $ 81,612 The following schedule details debt service requirements to maturity for the County’s Certificates of Participation payable at June 30, 2008. Year Ending June 30, 2009 2010 2011 2012 2013 2014 - 2018 2019 - 2022 Principal $ 21,545 21,610 11,675 1,740 1,810 10,375 10,320 $ 79,075 Interest 3,689 2,799 1,734 1,167 1,097 4,172 1,321 $ 15,979 $ CAPITAL LEASES Governmental Activities On February 1, 1997, the County entered into an agreement to sell certain jail facilities and then lease them back for a 15-year term. The jail facilities were sold for $34,500, and the proceeds were used to finance the construction of the baseball stadium. On September 1, 1999 and October 1, 2003, Pima County amended the capital lease agreement between U.S. Bank Trust National Association and Pima County. The amendments extended the lease term to 2014 and 2018 respectively, increased the range of interest rates and increased the County’s obligation under the lease agreement. The County has also entered into capital leases for computer equipment. The outstanding balance as of June 30, 2008, for these leases totaled $266. The net book value of assets acquired through capital leases consists of $18,697 of buildings and $117 equipment. The following schedule details capital lease debt service requirements to maturity at June 30, 2008. 65 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) Governmental Activities: Year Ending June 30, 2009 2010 2011 2012 2013 2014 - 2018 Buildings Principal Interest $ 1,965 $ 1,062 2,025 982 2,125 878 2,230 775 2,780 648 13,555 1,446 $ 24,680 $ 5,791 Equipment Principal Interest $ 123 $ 8 107 4 36 1 $ 266 $ 13 SEWER REVENUE BONDS AND LOANS Business-type Activities (Payments made from user charges received in the Regional Wastewater Reclamation Department Enterprise Fund) Pima County sewer revenue bonds, as presented below, were issued to provide monies to construct improvements to the County’s Regional Wastewater Reclamation Department system. Of the total amount originally authorized, $706 from the May 20, 1997, and $28,237 from the May 18, 2004 bond election remain unissued. Issue Series of 1998 Series 2001 Refunding Series of 2004 Refunding Series of 2007 Series of 2008 Issue Interest Amount Rates Maturities $ 29,185 4.00 - 5.50% 2009-15 19,440 4.00 - 5.40% 2009-15 25,770 3.50 - 5.50% 2009-15 50,000 3.75 - 5.00% 2009-26 75,000 4.00 - 5.00% 2009-23 Sewer revenue bonds outstanding Less unamortized deferred amount: Total sewer revenue bonds outstanding Outstanding June 30, 2008 $ 13,355 12,655 18,145 45,785 75,000 164,940 (1,239) $ 163,701 The following schedule details sewer revenue bond debt service requirements to maturity at June 30, 2008. Year Ending June 30, 2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2026 Principal $ 7,870 8,090 7,410 8,395 9,340 52,335 60,835 10,665 $164,940 66 Interest $ 7,175 6,821 6,470 6,134 5,751 21,742 10,153 867 $ 65,113 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) The Regional Wastewater Reclamation Department entered into loan agreements (1996, 1997, 2000 and 2004 loans payable) to provide funds for the defeasance of prior sewer revenue bonds and the construction and improvement of wastewater treatment facilities. Interest is payable semiannually and is calculated based on the principal amount of the loan outstanding during such period. Issue Issue Amount 1996 Loans Payable $ 11,313 1997 Loans Payable 7,500 2000 Loans Payable 61,180 2004 Loans Payable 19,967 Loans payable Less unamortized deferred amount Total loans payable Interest Rates 3.19% 2.95% 2.20% 1.81% Outstanding Maturities June 30, 2008 2009-12 $ 5,976 2009-11 2,517 2009-16 42,941 2009-24 19,138 70,572 (146) $ 70,426 The following schedule details loans payable debt service requirements to maturity at June 30, 2008. Year Ending June 30, 2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 Principal $ 5,955 6,317 7,605 7,891 6,937 26,691 6,338 2,838 $ 70,572 Interest $ 2,423 2,200 1,948 1,667 1,397 3,591 1,007 95 $ 14,328 Pima County has pledged future user charges, net of specified operating expenses, to repay $164,940 in sewer revenue bonds issued between 1998 and 2008, and $70,572 in sewer revenue loans issued between 1996 and 2004. Proceeds from the bonds and loans provided financing for construction of various treatment facilities and sewer infrastructure within Pima County. The bonds and loans are payable from net sewer revenues and are payable through 2026. Annual principal and interest payments on the bonds are expected to require approximately 33 percent of net revenues. The annual principal and interest payments on the loans are expected to require approximately 23 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $230,053. Total principal and interest remaining to be paid on the loans is $84,900. Principal and interest paid for bonds and loans in the current year and total customer net revenues were $11,954, $8,312 and $34,203, respectively. CONTRACTS AND NOTES Business-type Activities (Payments made from restricted assets in the Regional Wastewater Reclamation Department Enterprise Fund) Contracts and notes consist of contract retentions for several construction projects. Generally, interest is not accrued and the timing of payments is based on completion of the related construction projects. 67 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 7: Long-Term Liabilities (continued) LEGAL DEBT MARGIN County General Obligation Bonds General obligation debt may not exceed 6 percent of the value of the County’s taxable property as of the latest assessment. However, Pima County received voter approval to increase the debt limit to 15 percent of the value of taxable property. The legal debt margin at June 30, 2008, is as follows: Net assessed valuation $ 8,220,396 1,233,059 Debt Limit (15% of net assessed valuation): Amount of debt applicable to debt limit: General obligation bonds outstanding $ Less net assets in debt service fund available for payment of general obligation bond principal 348,335 (10,241) Legal debt margin available (338,094) $ 894,965 Flood Control General Obligation Bonds Flood Control general obligation debt may not exceed 5 percent of the value of the Flood Control District’s taxable property as of the latest assessment. Legal debt margin at June 30, 2008, is as follows: Net assessed valuation $ 7,412,190 Debt Limit (5% of net assessed valuation): 370,610 Amount of debt applicable to debt limit: Flood Control obligation bonds outstanding $ Less net assets in debt service fund available for payment of flood control bond principal 725 (40) Legal debt margin available (685) $ 68 369,925 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 8: Short-term Debt Line of Credit The County maintains a revolving line of credit with Bank of America National Trust and Savings Association to meet its short-term cash needs. At June 30, 2008, the County had an outstanding balance of $0. Advances on the line of credit are payable on demand. The credit line is secured by the County’s general taxing authority. Line of credit July 1, 2007 Balance $0 Draws $ 112,053 Repayments $112,053 June 30, 2008 Balance $0 Note 9: Landfill Liabilities SOLID WASTE LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS: State and Federal laws and regulations require the County to place a final cover on its solid waste landfill sites when these sites stop accepting waste and to perform certain maintenance and monitoring functions at the sites for thirty years after their closure. Although closure and post-closure care costs will not be paid until near or after the date the landfills stop accepting waste, the County records a portion of these closure and post-closure care costs as a long-term liability in each period, based on landfill capacity used. The $18,419 reported as landfill closure and post-closure care long-term liability within the governmental activities represents the cumulative amount reported to date, based on the percentage used of each landfill's total estimated capacity. The County will recognize the remaining estimated cost of closure and post-closure care of $5,819 as the remaining estimated capacities are used. These amounts are based on what it would cost to perform all closure and post-closure care in the fiscal year ended June 30, 2008; actual costs may change due to inflation, changes in technology, or changes in regulations. Landfill Site Capacity Used June 30, 2008 Estimated Remaining Service Life Ajo * Sahuarita ** Tangerine 100% 44% 88% 0 Year 25 Years 2 Years *Life extending facility development options are presently being considered for the Ajo Landfill, including vertical and/or horizontal expansion. **Sahuarita’s facility has incurred a decrease in annual solid waste tipping, because of this the expected service life of the landfill has increased. The County plans to fund the estimated closure and post-closure care costs with proceeds of general obligation bonds and with solid waste tipping fees. 69 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 9: Landfill Liabilities (continued) According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, post-closure, and corrective action when needed. The County is in compliance with these requirements. The Ina Road Landfill facility is closed to municipal solid waste and only receives green waste and construction debris. It is not subject to the closure and post-closure cost requirements referred to above. Pima County estimates that it will cost approximately $9,520 when closure occurs and plans to fund the cost with proceeds of general obligation bonds and with solid waste tipping fees. At this time, there is no closure date available, and there is no known pollution. Note 10: Pensions and Other Postemployment Benefits (OPEB) Pension Plan Descriptions The County contributes to the Arizona State Retirement System (ASRS), the Corrections Officer Retirement Plan (CORP), the Public Safety Personnel Retirement System (PSPRS), consisting of Pima County Sheriffs and Pima County - County Attorney Investigators, and the Elected Officials Retirement Plan (EORP). The EORP and the PSPRS - Pima County, County Attorney Investigators, are not described due to their relative insignificance to the County’s financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The retirement benefits are generally paid at a percentage, based on years of service, of the retirees’ average compensation. Long-term disability benefits vary by circumstance, but generally pay a percentage of the employee’s monthly compensation. Health insurance premium benefits are generally paid as a fixed dollar amount per month towards the retiree’s healthcare insurance premiums, in amounts based on whether the benefit is for the retiree or for the retiree and his or her dependents. The ASRS administers a cost-sharing, multiple-employer defined benefit pension plan; a cost-sharing, multiple-employer defined benefit health insurance premium plan; and a cost-sharing, multipleemployer defined benefit long-term disability plan that covers employees of the State of Arizona and employees of participating political subdivisions, including general employees of the County, and school districts. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium plan that covers Pima County Sheriff’s public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The CORP administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium plan that covers certain employees of the State of Arizona’s Departments of Corrections and Juvenile Corrections, and County employees whose primary duties require direct inmate contact. The CORP is governed by The Fund Manager of PSPRS and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by contacting the applicable plan. 70 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 10: Pensions and Other Postemployment Benefits (OPEB) (continued) ASRS PSPRS and CORP 3300 N. Central Ave Phoenix, AZ 85012 (602) 240-2000 or (800) 621-3778 3010 East Camelback Road Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 Funding Policy The Arizona State Legislature establishes and may amend active plan members’ and the County’s contribution rates for ASRS, PSPRS and CORP. Cost-sharing plans For the year ended June 30, 2008, active ASRS members were required by statute to contribute at the actuarially determined rate of 9.60 percent (9.10 percent for retirement and 0.50 percent for long-term disability) of the members’ annual covered payroll. The County was required by statute to contribute at the actuarially determined rate of 9.60 percent (8.05 percent for retirement, 1.05 percent for health insurance premium, and 0.50 percent for long-term disability) of the members’ annual covered payroll. The County’s contributions for the current and 2 preceding years, all of which was equal of the required contributions, were as follows: ASRS Retirement Fund Health Benefit Supplement Fund Long-term Disability Fund Year ended June 30, 2008 2007 2006 $ 20,981 19,169 13,685 $ 2,737 2,666 2,680 $ 1,303 1,270 1,186 Agent plans For the year ended June 30, 2008, active PSPRS members were required by statute to contribute 7.65 percent of the members’ annual covered payroll, and the County was required to contribute at the actuarially determined rate of 18.25 percent, the aggregate of which is the actuarially required amount. As allowed by statute, the County contributed 3.65 percent of the members’ required contribution, with the members contributing 4.00 percent. The health insurance premium portion of the contribution was set at 1.74 percent of covered payroll. Active CORP members were required by statute to contribute 7.96 percent of the members’ annual covered payroll, and the County was required to contribute at the actuarially determined rate of 7.44 percent, the aggregate of which is the actuarially required amount. The health insurance premium portion of the contribution rate was actuarially set at 1.15 percent of covered payroll. 71 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 10: Pensions and Other Postemployment Benefits (OPEB) (continued) Actuarial methods and assumptions The contribution requirements for the year ended June 30, 2008 were established by the June 30, 2006 actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plans and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on 1) the plans as understood by the County and plans’ members and include the types of benefits in force at the valuation date, and 2) the pattern of sharing benefit costs between the County and plans’ members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The significant actuarial methods and assumptions used are the same for all plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2008 contribution requirements, are as follows: PSPRS June 30, 2006 Projected unit credit CORP June 30, 2006 Projected unit credit 8.50% 5.50% - 8.50% 5.00% Level percentage open 8.50% 5.50% - 8.50% 5.00% Level percentage open 30 Years for unfunded actuarial accrued liability, 20 years for excess 30 Years for unfunded actuarial accrued liability, 20 years for excess Smoothed market value Smoothed market value Actuarial valuation date Actuarial cost method Actuarial Assumptions: Investment rate of return Projected salary increases includes inflation at Amortization method Remaining amortization period Asset valuation method Annual Pension and OPEB Cost The County’s pension/OPEB cost for the PSPRS and CORP agent plans for the year ended June 30, 2008, and related information follows: PSPRS CORP Health Health Pension Insurance Pension Insurance Annual pension/OPEB cost $ 6,923 $ 565 $ 1,513 $ 247 Contibutions made $ 6,923 $ 444 $ 1,513 $ 163 72 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 10: Pensions and Other Postemployment Benefits (OPEB) (continued) Trend Information Annual pension cost information for the current and 2 preceding years follows for the PSPRS and CORP agent plans. Annual OPEB cost information for the current year (i.e., transition year) is as follows. Information about preceding years will be added over the next 2 years. Percentage of Plan Year Ended Annual Pension/ Annual Cost Net Pension/ June 30 OPEB Cost Contributed OPEB Obligation PSPRS Pension 2008 $ 6,923 100% Health insurance 2008 $ 565 79% Pension & health insurance 2007 $ 5,422 100% Pension & health insurance 2006 $ 4,720 100% 2008 $ 1,513 100% Health insurance 2008 $ 247 66% Pension & health insurance 2007 $ 1,224 100% Pension & health insurance 2006 $ 782 100% CORP Pension $ 121 $ 84 Funded Status The funded status of the plans, as of the most recent valuation date June 30, 2008, along with the actuarial assumptions and methods used in those valuations follow. Additionally, the required schedule of funding progress, presented as Exhibit B-2 following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Actuarial accrued liability Actuarial value of assets Unfunded actuarial accrued liability (funding excess) Funded ratio Covered payroll Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll PSPRS Pension Health Insurance Insurance $ 198,116 $ 8,056 $ 133,286 0 CORP Pension Health Insurance Insurance $ 55,365 $ 2,958 $ 45,957 0 $ 64,830 $ 10,292 $ 67.30 % $ 32,495 $ 199.50 % 73 8,056 $ 0 % 83.00 % 32,495 $ 21,455 $ 24.79 % 43.8 % 2,958 0 % 21,455 13.79 % PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 10: Pensions and Other Postemployment Benefits (OPEB) (continued) Actuarial valuation date Actuarial cost method Actuarial Assumptions: Investment rate of return Projected salary increases includes inflation at Amortization method Remaining amortization period PSPRS June 30, 2008 Projected unit credit CORP June 30, 2008 Projected unit credit 8.50% 5.50% - 8.50% 5.00% Level percentage closed for unfunded actuarial accrued liability, open for excess 8.50% 5.50% - 8.50% 5.00% Level percentage closed for unfunded actuarial accrued liability, open for excess 28 Years for unfunded actuarial accrued liability, 20 years for excess 28 Years for unfunded actuarial accrued liability, 20 years for excess Smoothed market value Smoothed market value Asset valuation method Postemployment Healthcare Plan Retiree Insurance Program Employees retiring from Pima County service, who receive monthly income from any of the Arizona State individual retirement plans, are eligible to continue medical and dental insurance coverage at group rates through the County (the Program). It is a single-employer plan and the benefits and premium rates are approved by the Board of Supervisors on an annual basis for active and retired members. Although Pima County does not explicitly pay a portion of the retiree’s premiums, because of the inclusion of this risk class in the insured pool, there is an implicit rate subsidy or “premium rate differential” that is incurred by the County. No separate financial report is provided for the Program. Funding Policy The Program is currently funded on a pay-as-you-go basis. Acturarial valuation date Actuarial accrued liability Actuarial value of assets Unfunded actuarial accrued liability (funding excess) Funded ratio Covered payroll Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll 74 $ 7/1/2007 155,437 0 $ 155,437 $ 0 % 292,249 53.2 % PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 10: Pensions and Other Postemployment Benefits (OPEB) (continued) Annual Pension Cost and Net Pension Obligation Governmental Activities Annual required contribution Interest on net pension obligation $ 13,626 521 Business-type Activities $ 2,536 98 Total Obligation $ 16,162 619 Annual pension cost 14,147 2,634 16,781 Contributions made Increase in net pension obligation Net pension obligation at beginning of year Net pension obligation at end of year (4,302) 9,845 (380) 2,254 (4,682) 12,099 $ 9,845 $ Method/Assumption Valuation date Actuarial cost method Amortization method for actuarial accrued liabilities July 1, 2007 Projected unit credit Level percentage of payroll Remaining amortization period 30 years open Investment rate of return 4.50% Medicare coverage age 65 Salary increases Based on EORP, CORP, ASRS, and PSRS pension valuations 2.50% Payroll growth Active members 2.50% 6,728 LTD/Retiree and spouses currently receiving benefits 1,613 Retirement and disability age 75 2,254 $ 12,099 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 11: Interfund Transactions A. Interfund Assets/ Liabilities Due from / Due to Other Funds are used to record loans or unpaid operating transfers between funds. $ 117 744 1,044 $ To ta In te th O 2,038 l rn al Se rv i En te rp r er RD RW 1,085 ce ise es & S $ $ 8 $ 840 $ 12,031 748 1,883 5,650 768 12 2,568 Pima Health System & Services 1 RWRD 1 1,986 2 Other Enterprise 1,988 2,641 Internal Service Total Se rv ta G 7,943 3,019 Other Governmental PH pi Ca $ $ O t ov her er nm en ro j lP ta al en er G Amounts recorded as due to: General Capital Projects ic l ec ts Amounts recorded as due from: 2,641 826 $ 6,575 578 $ 11,628 $ 2,212 10 $ 1,087 $ 1,414 3,943 $ 8 $ 840 $ 26,293 B. Transfers Transfers are used to record transactions between individual funds to subsidize their operations and fund debt service payments and capital construction projects. General Capital Projects $ $ Other Governmental 3,791 $ 22,806 637 $ $ Se rv ic es 4,352 To ta l O 6,995 In te rn al er pr ise th er En t RD RW O $ 1,220 $ 47,854 2,627 29,160 21,515 51,392 6,995 6,995 Other Enterprise 2,550 Internal Service Total 32,716 3,090 28,657 RWRD th er G lP Ca pi ta G en er al Amounts recorded as transfers in: ro je ct s ov er nm en ta l Amounts recorded as transfers out: 2,550 4,352 $ 43,094 4,352 $ 36,486 $ 48,112 $ 7,632 $ 2,627 $ 4,352 $ 142,303 The table above does not include transfers of capital assets between the proprietary funds and the governmental activities because these are not reported in the governmental funds. The following proprietary funds transferred capital assets from/(to) the capital assets of Governmental Activities: Transfer from Transfer to $ Internal services Subtotal Capital assets Total $ 76 Transfer from (601) Capital assets (20) Capital assets (621) 6 (615) Transfer to RWRD Internal services PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 12: Stewardship, Compliance, and Accountability (Deficit Fund Balances) The Special Districts Fund (non-major governmental fund) had a deficit fund balance at June 30, 2008, of $1,302. This deficit can be eliminated in the future through normal operations. Note 13: Construction and Other Significant Commitments At June 30, 2008, Pima County had the following major contractual commitments related to Cultural Resources, Facilities Management, General Government, Library District, Pima Health Systems & Services, Transportation and Regional Wastewater Reclamation Department. Cultural Resources At June 30, 2008, the Pima County Cultural Resources Department had construction contractual commitments of $6,336. Funding for these expenditures will be provided from general obligation bonds. Facilities Management At June 30, 2008, the Pima County Facilities Management Department had construction contractual commitments of $8,828. Funding for these expenditures will be provided from general obligation bonds. General Government At June 30, 2008, Pima County had contractual commitments related to service contracts for Human Resources of $1,370, Institutional Health of $60,156 and Real Property of $5. Funding for these expenditures will be primarily provided from general fund revenues. Library District At June 30, 2008, Pima County had contractual commitments related to service contracts for Library District of $2,555. Funding for these expenditures will be primarily provided from library district revenues. Pima Health Systems & Services At June 30, 2008, Pima County had contractual commitments related to service contracts for Pima Health Systems & Services of $155,062. Funding for these expenditures will be primarily provided from federal and state funding sources. Transportation At June 30, 2008, the Pima County Transportation Department had construction contractual commitments of $42,918 and other contractual commitments related to service contracts of $12,216. Funding for these expenditures will be primarily provided from Transportation Revenue Bonds and Highway User Tax Revenue, the primary source of revenue for the Transportation Department. Regional Wastewater Reclamation Department At June 30, 2008, the Regional Wastewater Reclamation Department Enterprise Fund had construction contractual commitments of $28,525 and other contractual commitments related to service contracts of $3,864. Funding for these expenditures will be primarily from Sewer Revenue Bonds and related fees. 77 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2008 (in thousands) Note 14: Subsequent Event On May 13, 2008, PHS&S was notified that their ambulatory services contract with AHCCCS serving Pima and Santa Cruz counties would not be renewed. Effective October 1, 2008, PHS&S would be only providing care to an estimated 3,000 members that are both eligible through AHCCCS and Arizona Long Term Care System. This results in a reduction of approximately 27,000 members and $84 million in reduced revenues and expenses. As a result of this contract termination, PHS&S has implemented a plan to significantly reduce expenses, initially through a reduction in workforce of 53 employees, effective September 30, 2008. 78 Required Supplementary Information Other Than Management’s Discussion & Analysis PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund For the Year Ended June 30, 2008 (in thousands) Budgeted Amounts Original Final Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ 267,784 2,927 152,524 31,486 5,575 2,307 6,614 469,217 $ 267,784 2,927 152,524 31,486 5,575 2,307 6,614 469,217 Expenditures: Assessor Board of Supervisors Clerk of Superior Court Community & Economic Development Constables County Administration County Attorney Department of Institutional Health Forensic Science Center Graphics Justice Courts Juvenile Court Justice & Law Enforcement Public Works Recorder Sheriff Superior Court Superior Court Mandated Services School Superintendent Treasurer Debt Service - principal - interest - miscellaneous Total expenditures 9,085 1,922 10,776 16,439 924 68,692 20,545 107,815 2,838 811 7,993 23,980 29,807 32,806 2,756 111,392 28,688 1,575 1,384 2,607 3,124 2,805 6 488,770 9,085 1,922 10,776 16,439 924 66,136 20,545 107,815 2,838 811 7,993 23,980 29,807 32,806 2,756 113,798 28,688 1,725 1,384 2,607 3,124 2,805 6 488,770 Excess (deficiency) of revenues over (under) expenditures (19,553) Other financing sources (uses): Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balance Fund balance at beginning of year Fund balance at end of year Exhibit B-1 Variance Over/Under Actual $ 268,493 2,971 148,158 32,307 5,020 3,343 8,314 468,606 $ 709 44 (4,366) 821 (555) 1,036 1,700 (611) 8,968 1,732 10,676 15,956 931 37,549 19,714 106,502 2,906 781 7,954 23,984 29,894 31,616 2,628 118,623 28,583 1,933 1,462 2,221 3,115 2,805 4 460,537 2 28,233 (19,553) 8,069 27,622 5,116 (28,637) (23,521) 5,116 (28,637) (23,521) 47,854 (43,094) 4,760 42,738 (14,457) 28,281 (43,074) (43,074) 12,829 55,903 43,074 $ 43,074 $ See notes to budgetary comparison schedule 79 $ 57,560 70,389 117 190 100 483 (7) 28,587 831 1,313 (68) 30 39 (4) (87) 1,190 128 (4,825) 105 (208) (78) 386 9 $ 14,486 70,389 PIMA COUNTY, ARIZONA Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund June 30, 2008 (in thousands) Note 1: Budgetary Basis of Accounting Arizona Revised Statutes (ARS § 42-17101) requires that on or before the third Monday in July of each year, the Board of Supervisors adopt a tentative budget for the fiscal year. A public hearing and special board meeting is scheduled at which time the final budget is adopted. The County adopts, on a modified accrual basis, budgets for all governmental fund types (General, Special Revenue, Debt Service and Capital Projects Fund). Operating plans for all Enterprise Funds are also adopted as part of the budget document. Per ARS § 42-17106, expenditures may not be in excess of the amounts specified for each purpose in the budget, except as provided by law. Each Special Revenue Fund maintains budgetary control at the fund or sub-fund level where applicable. Budgetary control for the Capital Projects Fund and the Debt Service Fund are at the fund level. Adopted budgets provide that the beginning unreserved fund balance plus revenues and other financing sources equal expenditures and other uses. ARS § 42-17106 requires that amendments to the budget, including transfers of appropriations between departments or funds are not permissible unless the Board of Supervisors determines that it is in the public interest and it is based on a demonstrated need. Note 2: Excess of Expenditures Over Appropriations For the year ended June 30, 2008, expenditures exceeded appropriations in the following General Fund departments (the legal level of budgetary control) by the following amounts: Sheriff $4,825; Superior Court Mandated Services $208; Justice & Law Enforcement $87; School Superintendent $78; Forensic Science Center $68; Constables $7; and Juvenile Courts $4. These expenditures were funded by greater than anticipated revenues. 80 PIMA COUNTY, ARIZONA Schedule of Retirement Plans' Funding Progress June 30, 2008 (in thousands) Plan Year Ended June 30 Actuarial Value of Plan Assets Funding Liability (Excess) Actuarial Accrued Liability Funded Ratio Exhibit B-2 Annual Covered Payroll Unfunded Liability as Percentage of Covered Payroll PSPRS Pension 2008 Health Insurance 2008 Pension 2007 Health Insurance 2007 Pension 2006 Health Insurance 2006 CORP Pension 2008 Health Insurance 2008 0 Pension 2007 44,196 Health Insurance 2007 0 Pension 2006 43,318 Health Insurance 2006 0 $ 133,286 $ 0 128,524 0 133,450 0 $ 45,957 Pima County Retiree Insurance Program Health 2007 0 Insurance $ $ 64,830 67.3% 32,495 199.5% 8,056 8,056 0% 32,495 24.8% 197,365 68,841 65.1% 29,428 233.9% 7,930 7,930 0% 29,428 27.0% 181,084 47,634 73.7% 28,556 166.8% 7,143 7,143 0% 28,556 25.0% 9,408 83.0% 21,455 43.8% 2,958 2,958 0% 21,455 13.8% 54,488 10,292 81.1% 20,190 51.0% 2,735 2,735 0% 20,190 13.6% 49,891 6,573 86.8% 17,658 37.2% 2,600 2,600 0% 17,658 16.6% 155,437 0% $ 292,249 53.2% 198,116 55,365 155,437 $ $ $ See note to schedule of retirement plans' funding progress 81 $ $ PIMA COUNTY, ARIZONA Note to the Schedule of Retirement Plans' Funding Progress June 30, 2008 (in thousands) Note 1: Actuarial Information Available Actuarial measurements were not made for Pima County’s Postemployment Healthcare Plan prior to the implementation of GASB Statement 45. In future years when additional actuarial measurements are made, trend information for the County’s Postemployment Healthcare Plan will be presented. 82 Combining Statements and Other Schedules Other (Nonmajor) Governmental Funds OTHER GOVERNMENTAL FUNDS (Nonmajor) Transportation Fund - to account for administrative and operating costs, as well as resources transferred to the Capital Projects Fund for construction of highways and streets. Financing is provided primarily from the County share of gasoline and vehicle license taxes collected by the State. Health and Animal Control Fund - to account for resources used to finance activities involved in the conservation and improvement of public health. Major sources of funding include Federal and State grants, charges for services provided and operating transfers from the General Fund. Regional Flood Control District Fund - to account for amounts expended to protect persons and property from floodwaters. Revenues are provided by taxes on real property and government grants. The Regional Flood Control District is a blended component unit of Pima County. Employment and Training Fund - to account for resources controlled by the County as a prime sponsor under the Workforce Investment Act. Financing is provided by the Federal Government. Other Special Revenue Fund - to account for resources specifically identified to be expended for the various other programs of the County. These include various probation programs, consumer protection programs, family support, antiracketeering programs, law library, etc. Revenues are provided by fines, intergovernmental revenues, fees and forfeitures and charges for services. Other Special Revenue Grants Fund - to account for Federal and State grants received by the County not required to be accounted for in a separate fund. Each grant has a specific project objective and the grant funds must be used for a stated purpose. School Reserve Fund - to account for Federal and State grants received by the Superintendent of Schools. Each grant has a specific project objective and the grant funds must be used for a stated purpose. Environmental Quality Fund - to account for resources specifically identified to be expended for protection of water, air and land from pollutants. Revenues are provided by fines, fees and forfeitures, licenses, permits and Federal and State grants. Special Districts Fund - to account for financial activity related to Improvement Districts, which are legally separate districts not accounted for elsewhere. Solid Waste Fund – to account for the resources used to finance the operations of the County’s landfills and transfer stations and to account for the state shared revenue tax for the tire recycling program. Library District Fund – to account for the resources used to finance activities to provide library services to Pima County and the City of Tucson. Revenues are provided primarily by Library District taxes. The Library District is a blended component unit of Pima County. Stadium District Fund - to account for resources specifically identified to be expended for the Stadium District. Revenues are provided by the car rental, hotel/motel bed and recreation vehicle park taxes and charges for services provided. The Stadium District is a blended component unit of Pima County. Debt Service Fund - to account for the accumulation of resources for and the payment of general long-term debt principal and interest. (This page is intentionally blank) 83 PIMA COUNTY, ARIZONA Combining Balance Sheet - Nonmajor Governmental Funds June 30, 2008 (in thousands) Transportation Special Revenue Funds Regional Flood Control Employment District and Training Health and Animal Control Other Grants Other Assets Cash and cash equivalents Property taxes receivable (net of allowances for uncollectables) Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expenditures Other assets Special assessments receivable Total assets $ 8,688 $ 18 1,520 8,324 472 $ 901 11 8 504 103 3,780 63 127 20 1,519 38 2,196 $ $ 1,938 4 15 44,719 $ 270 109 21 268 680 6 6 3,796 39 67 5,200 37 $ 20,107 $ 4,565 $ 3,620 $ 1,957 $ 51,064 $ 4,154 $ 2,488 $ 899 $ 1,155 $ 817 $ 2,035 $ Liabilities and fund balances Liabilities: Accounts payable Interest payable Employee compensation Due to other funds Due to other governments Deferred revenues Total liabilities 95 13 191 564 1,470 161 13 18 1,251 616 6,288 1,571 6 683 7 159 540 7,376 2,971 2,598 1,541 9,078 2,966 15 67 37 743 21 303 3,821 585 17 Fund balances: Reserved for inventory Reserved for prepaid expenditures Reserved for debt service Reserved for capital repairs and refurbishments Reserved for specified programs Unreserved 1,519 38 127 20 11,174 1,447 1,022 401 41,919 1,151 Total fund balances 12,731 1,594 1,022 416 41,986 1,188 Total liabilities and fund balances $ 20,107 $ 4,565 $ 84 3,620 $ 1,957 $ 51,064 $ 4,154 Exhibit C-1 Special Revenue Funds School Reserve $ Environmental Quality 2,232 $ 958 1 3 499 124 450 38 Special Districts $ Solid Waste 39 $ Library District 2,174 $ Stadium District 18,380 $ 1,110 46 5 512 272 311 9 Debt Service Fund 1,160 126 30 2 222 282 36 1 1 $ 12,038 Total Other Governmental Funds $ 1,887 158 176 8 3,898 359 2,568 20,247 1,325 1,646 188 5,200 1,340 1,340 $ 2,865 $ 1,449 $ 285 $ 90 90 97 4 $ $ 1,379 $ 3,274 $ 19,693 $ 1,703 $ 14,267 $ 130,097 $ 374 $ 1,082 $ 49 $ 320 $ 70 4 1,341 13 101 1,340 388 292 2,681 448 9 521 228 304 925 136 1,554 11,165 6 3,330 2,212 784 18,055 3,060 279 1,874 35,552 1 1 12,393 1,646 188 12,395 94 2 99 $ 2,468 888 269 2,477 1,157 2,865 $ 1,449 $ (1,304) 1,675 1,151 203 16,429 1,324 (1,302) 2,826 16,633 1,424 1,379 93,326 $ 3,274 $ 85 19,693 $ 1,703 99 2,766 77,451 12,393 $ 14,267 94,545 $ 130,097 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended June 30, 2008 (in thousands) Transportation Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Special Revenue Funds Regional Flood Control Employment District and Training Health and Animal Control $ $ Total revenues Expenditures: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Debt service - principal - interest - miscellaneous 200 63,761 331 $ 503 214 2,405 11,673 2,582 180 5 428 65,009 17,273 25,331 924 165 145 79 306 4,952 7,311 502 2,491 6,407 26,644 12,464 21,663 42,390 $ 12,158 $ 19,819 6,447 53 24,982 9,706 14,699 43,685 $ 43,685 27,046 14,699 Excess (deficiency) of revenues over (under) expenditures 21,324 (9,773) 11,945 13,106 (642) Other financing sources (uses): Proceeds on capital leases Premium on bonds Proceeds from sale of capital assets Transfers in Transfers (out) 25 3,450 (24,944) 10,108 Total other financing sources (uses) (21,469) 10,108 (145) 335 544 (353) 1,314 478 769 15 105 201 5,562 446 2,220 145 10 13,106 40,533 105 1,752 27,046 Total expenditures 29,140 40,571 (7,477) 1,819 312 Net change in fund balances Fund balance at beginning of year 289 2 11,093 (3,778) 112 (3) 289 7,629 109 152 1,928 (11,401) 12,876 Change in reserve for inventory Fund balance at end of year Other Grants Other (11,401) 41,834 (740) (55) $ 12,731 $ 1,594 $ 86 1,022 $ 416 $ 41,986 $ 1,188 Exhibit C-2 Total Other Governmental Funds Special Revenue Funds School Reserve Environmental Quality Special Districts Solid Waste Library District $ $ $ $ 4,228 4,228 Debt Service Fund Stadium District 32,276 $ 55,762 $ 556 2,134 1,686 $ 1,152 5,843 4,421 $ 1,949 1,512 16 88 51 15 5 160 89 690 740 981 16 1,842 3,974 561 7,244 39,108 3,477 57,620 301,655 56,459 19,757 326 44,801 30,852 43,741 8,310 31,446 105 34,184 24,868 56,604 19,834 326 76,542 295,071 3 8,310 4,385 30,298 3,239 3,980 67 3,980 4,385 248 113,369 556 4,739 147,453 17,744 1,460 6,063 10,271 (411) 70 8,310 30,298 3,239 491 (1,066) 8,810 238 (18,922) 6,584 312 745 27 51,392 (48,112) 745 423 500 2,793 (3,014) 22,624 (3,772) 500 (3,772) (221) 23,369 4,364 (566) 5,038 17 4,447 10,948 11,595 1,407 7,946 83,652 (1,200) 423 (1,200) 248 12 (709) 2,229 1,145 (593) 3,392 (55) $ 2,477 $ 1,157 $ (1,302) $ 2,826 $ 87 16,633 $ 1,424 $ 12,393 $ 94,545 (This page is intentionally blank) 88 Combining Statements and Other Schedules Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual – Other Governmental Funds PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Capital Projects Fund For the Year Ended June 30, 2008 (in thousands) $ 13,781 23,517 3,598 371 41,267 Variance Over/Under Actual Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Exhibit C-3 $ 17,023 8,839 4,812 3,167 33,841 $ 3,242 (14,678) 1,214 2,796 (7,426) Expenditures: Capital outlay 250,543 139,539 111,004 Total expenditures 250,543 139,539 111,004 (209,276) (105,698) 103,578 145,000 168,758 175,000 1,219 29,160 (36,486) 168,893 30,000 1,219 5,402 (36,486) 135 (40,518) 63,195 103,713 Deficiency of revenues under expenditures Other financing sources (uses): Face amount of long-term debt Premium on bonds Transfers in Transfers (out) Total other financing sources 23,758 Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 106,189 65,671 89 $ 89,448 152,643 $ (16,741) 86,972 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Variance Over/Under Actual Budget Revenues: Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Exhibit C-4 311 65,832 1,010 400 136 67,689 $ 200 63,761 331 503 214 65,009 $ (111) (2,071) (679) 103 78 (2,680) Expenditures: Highways and streets Total expenditures 47,337 47,337 43,685 43,685 3,652 3,652 Excess of revenues over expenditures 20,352 21,324 972 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing uses 3,758 (25,230) (21,472) 25 3,450 (24,944) (21,469) 25 (308) 286 3 (1,120) (145) Net change in fund balance Fund balance at beginning of year Fund balance at end of year 4,454 3,334 $ 90 $ 12,876 12,731 975 $ 8,422 9,397 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Health and Animal Control - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Expenditures: Health Health grants Total expenditures Deficiency of revenues under expenditures Other financing sources: Transfers in Total other financing sources 2,497 10,376 2,428 206 192 15,699 2,405 11,673 2,582 180 5 428 17,273 16,708 9,472 26,180 16,602 10,444 27,046 106 (972) (866) (10,481) (9,773) 708 10,072 10,072 10,108 10,108 36 36 335 744 1,314 (55) (732) (55) Net change in fund balance $ (409) 2,046 Fund balance at beginning of year Change in reserve for inventory Fund balance at end of year Variance Over/Under Actual Budget Revenues: Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues Exhibit C-5 $ 1,637 91 $ 1,594 $ $ (92) 1,297 154 (26) 5 236 1,574 (43) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Regional Flood Control District - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Variance Over/Under Actual Budget Revenues: Taxes Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Exhibit C-6 25,113 4,500 100 200 185 30,098 $ 25,331 924 165 145 79 26,644 $ 218 (3,576) 65 (55) (106) (3,454) Expenditures: Flood control Total expenditures 17,075 17,075 14,699 14,699 2,376 2,376 Excess of revenues over expenditures 13,023 11,945 (1,078) Other financing (uses): Transfers (out) Total other financing (uses) (11,401) (11,401) (11,401) (11,401) Net change in fund balance 1,622 Fund balance at beginning of year Fund balance at end of year 1,120 2,742 $ 92 544 $ 478 1,022 (1,078) $ (642) (1,720) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Employment and Training - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Expenditures: Employment and training Total expenditures Variance Over/Under Actual Budget Revenues: Intergovernmental Miscellaneous Total revenues 11,479 202 11,681 $ 11,997 11,997 12,158 306 12,464 (642) Other financing sources: Transfers in Total other financing sources 289 289 289 289 Net change in fund balance (27) (353) Fund balance at beginning of year Fund balance at end of year 812 785 $ 93 $ 13,106 13,106 (316) Deficiency of revenues under expenditures Exhibit C-7 $ 769 416 679 104 783 (1,109) (1,109) (326) (326) $ (43) (369) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Other - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Expenditures: General government Public safety Highways and streets Culture and recreation Education and economic opportunity Debt service - principal - interest Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing sources Net change in fund balance $ $ (95) 390 (104) 1,347 (531) 1,007 19,819 6,447 53 446 2,220 145 10 29,140 14,761 (900) (3) 1,703 257 (70) (4) 15,744 (24,228) (7,477) 16,751 11,153 (2,819) 8,334 314 11,093 (3,778) 7,629 30,178 $ 4,952 7,311 502 2,491 6,407 21,663 34,580 5,547 50 2,149 2,477 75 6 44,884 (15,894) Fund balance at beginning of year Fund balance at end of year 5,047 6,921 606 1,144 6,938 20,656 Variance Over/Under Actual Budget Revenues: Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues Exhibit C-8 14,284 94 $ 314 (60) (959) (705) 152 16,046 41,834 11,656 41,986 $ 27,702 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Other Grants - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Expenditures: Clerk of Superior Court Community Services County Attorney Institutional Health Justice Court Juvenile Court Legal Defender Parks and Recreation Public Defender Adult Probation Sheriff Superior Court Medical Assistance County Administrator Total expenditures 38,749 24 487 39,260 $ 20 7,475 2,902 120 12,340 22 144 66 9,778 6,469 388 240 39,964 Excess (deficiency) of revenues over (under) expenditures (704) Other financing sources (uses): Transfers in Transfers (out) Total other financing sources 40,533 105 1,752 42,390 $ (704) 735 31 $ 20 1,913 153 (105) 17 521 11 (57) (1) 193 (3,237) 77 (15) (97) (607) 1,819 2,523 95 112 (3) 109 1,928 $ 1,784 81 1,265 3,130 5,562 2,749 105 103 11,819 11 201 67 9,585 9,706 311 15 337 40,571 112 (3) 109 Net change in fund balance Fund balance at beginning of year Fund balance at end of year Variance Over/Under Actual Budget Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues Exhibit C-9 (740) 1,188 2,632 $ (1,475) 1,157 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual School Reserve - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Expenditures: School Reserve grants Total expenditures Variance Over/Under Actual Budget Revenues: Intergovernmental Total revenues Exhibit C-10 3,816 3,816 $ 3,910 3,910 4,228 4,228 $ 3,980 3,980 412 412 (70) (70) Excess (deficiency) of revenues over (under) expenditures (94) 248 342 Net change in fund balance (94) 248 342 Fund balance at beginning of year Fund balance at end of year $ 96 2,220 2,126 $ 2,229 2,477 $ 9 351 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Environmental Quality - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ 2,166 1,344 Expenditures: Environmental quality Environmental quality grants Total expenditures Other financing sources: Transfers in Total other financing sources Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 30 25 3,565 2,134 1,686 88 51 15 3,974 3,523 1,175 4,698 3,249 1,136 4,385 (1,133) Deficiency of revenues under expenditures 97 $ 423 423 (710) 12 $ 1,145 1,157 (32) 342 88 21 (10) 409 274 39 313 (411) 423 423 1,332 622 $ Variance Over/Under Actual Budget Revenues: Licenses and permits Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues Exhibit C-11 722 722 $ (187) 535 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Districts - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ 560 $ 560 Expenditures: Highways and streets Debt service - principal - interest Total expenditures 560 Excess of revenues over expenditures Other financing (uses): Transfers (out) Total other financing (uses) (560) (560) Net change in fund balance Fund balance at beginning of year Fund balance at end of year Variance Over/Under Actual Budget Revenues: Special assesments Investment earnings Total revenues Exhibit C-12 $ $ 98 556 5 561 $ (4) 5 1 3 (3) 67 70 (67) (70) 491 (69) (1,200) (1,200) (640) (640) (709) (709) (593) (1,302) $ (593) (1,302) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Solid Waste - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ 1,200 5,553 131 93 6,977 Expenditures: Sanitation Total expenditures Deficiency of revenues under expenditures Other financing sources: Transfers in Total other financing sources Fund balance at beginning of year Fund balance at end of year $ (48) 290 29 (4) 267 252 252 (1,585) (1,066) 519 3,105 2,020 99 $ 8,310 8,310 500 500 (1,085) $ 1,152 5,843 160 89 7,244 8,562 8,562 500 500 Net change in fund balance Variance Over/Under Actual Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Exhibit C-13 (566) $ 3,392 2,826 519 $ 287 806 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library District - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ Expenditures: Culture and recreation Total expenditures Variance Over/Under Actual Budget Revenues: Taxes Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues Exhibit C-14 31,957 4,797 500 300 1,150 38,704 $ 32,276 4,421 690 740 981 39,108 $ 319 (376) 190 440 (169) 404 37,091 37,091 30,298 30,298 6,793 6,793 1,613 8,810 7,197 Other financing (uses): Transfers (out) Total other financing (uses) (3,772) (3,772) (3,772) (3,772) Net change in fund balance (2,159) 5,038 Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year $ 7,125 4,966 100 $ 11,595 16,633 7,197 $ 4,470 11,667 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Stadium District - Special Revenue Fund For the Year Ended June 30, 2008 (in thousands) $ 1,905 1,116 Expenditures: Culture and recreation Total expenditures Excess of revenues over expenditures Other financing sources (uses): Transfers in Transfers (out) Total other financing sources (uses) $ 1 3,022 3,477 44 396 16 (1) 455 2,534 2,534 3,239 3,239 (705) (705) 488 238 (250) 3,205 (3,014) 191 Net change in fund balance Fund balance at beginning of year Fund balance at end of year Variance Over/Under Actual Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Exhibit C-15 1,427 2,106 101 $ 2,793 (3,014) (221) 679 $ 1,949 1,512 16 (412) (412) 17 $ 1,407 1,424 (662) $ (20) (682) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund For the Year Ended June 30, 2008 (in thousands) $ Expenditures: Debt service - principal - interest - miscellaneous Total expenditures Deficiency of revenues under expenditures Other financing sources: Premium on bonds Transfers in Total other financing sources 56,252 8 1,000 57,260 $ $ 55,762 16 1,842 57,620 $ (490) 8 842 360 55,459 22,456 30 77,945 56,459 19,757 326 76,542 (1,000) 2,699 (296) 1,403 (20,685) (18,922) 1,763 21,690 21,690 745 22,624 23,369 745 934 1,679 1,005 4,447 3,442 Net change in fund balance Fund balance at beginning of year Fund balance at end of year Variance Over/Under Actual Budget Revenues: Taxes Intergovernmental Investment earnings Total revenues Exhibit C-16 11,187 12,192 102 $ 7,946 12,393 $ (3,241) 201 Combining Statements and Other Schedules Other (Nonmajor) Enterprise Funds Other (Nonmajor) Enterprise Funds Development Services – to account for the operations of providing zoning permits, enforcing ordinances in compliance with state statutes and administering uniform building codes. Parking Garages – to account for the management and operation of six public parking garages located in downtown Tucson. PIMA COUNTY, ARIZONA Combining Statement of Net Assets Nonmajor Enterprise Funds June 30, 2008 (in thousands) Development Services Assets Current assets: Cash and cash equivalents Interest receivable Due from other funds Accounts receivable Prepaid expense Total current assets $ 5,480 12 2,641 10 7 8,150 Exhibit C-17 Total Other Enterprise Funds Parking Garages 2,244 7,716 17 2,641 13 7 10,394 1,456 (909) 1,861 12,927 251 (8,262) 1,861 12,927 1,707 (9,171) 547 547 6,777 6,777 7,324 7,324 Total assets 8,697 9,021 17,718 Liabilities Current liabilities: Accounts payable Employee compensation Due to other funds Due to other governments Total current liabilities 69 1,134 8 286 24 1,211 104 414 355 1,158 8 104 1,625 256 256 2 2 258 258 Total liabilities 1,467 416 1,883 Net assets Invested in capital assets Unrestricted 547 6,683 6,777 1,828 7,324 8,511 Noncurrent assets: Capital assets: Land and other improvements Buildings and improvements Equipment Less accumulated depreciation Total capital assets (net of accumulated depreciation) Total noncurrent assets Noncurrent liabilities: Other postemployment healthcare benefits Total noncurrent liabilities Total net assets $ 7,230 103 $ 2,236 5 $ 3 $ 8,605 $ 15,835 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended June 30, 2008 (in thousands) Development Services Operating revenues: Charges for services Other $ 8,992 210 Total net operating revenues Exhibit C-18 Total Other Enterprise Funds Parking Garages $ 1,720 $ 10,712 210 9,202 1,720 10,922 Operating expenses: Employee compensation Operating supplies and services Utilities Repair and maintenance General and administrative Consultants and professional services Depreciation Total operating expenses 11,380 296 200 102 2,043 618 283 14,922 295 8 197 132 907 6 336 1,881 11,675 304 397 234 2,950 624 619 16,803 Operating loss (5,720) (161) (5,881) Nonoperating revenues: Investment earnings Gain on disposal of assets 556 5 104 660 5 Total nonoperating revenues 561 104 665 Loss before contributions and transfers (5,159) Transfers in Transfers (out) 2,550 (2,627) Change in net assets (5,236) Net assets at beginning of year 12,466 Net assets at end of year $ 7,230 104 (57) (5,216) 2,550 (2,627) (57) (5,293) 8,662 $ 8,605 21,128 $ 15,835 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2008 (in thousands) Exhibit C-19 Development Services Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from customers for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments to employees for services $ 100 8,992 224 (1,347) (3,368) (10,027) Total Other Enterprise Funds Parking Garages $ $ 1,718 (1,203) (21) (290) 100 10,710 224 (2,550) (3,389) (10,317) Net cash provided by (used for) operating activities (5,426) 204 (5,222) Cash flows from noncapital financing activities: Loans with other funds (2,711) 108 (2,603) Net cash provided by (used for) noncapital financing activities (2,711) 108 (2,603) Cash flows from capital and related financing activities: Proceeds on sale of capital assets 39 39 Net cash provided by capital and related financing activities 39 39 Cash flows from investing activities: Interest on cash and investments 588 105 693 Net cash provided by investing activities 588 105 693 Net increase (decrease) in cash and cash equivalents (7,510) Cash and cash equivalents at beginning of year 12,990 Cash and cash equivalents at end of year $ (Continued) 105 5,480 417 (7,093) 1,819 $ 2,236 14,809 $ 7,716 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2008 (in thousands) Exhibit C-19.1 (Continued) Reconciliation of operating loss to net cash provided by (used for) operating activities Development Services $ (5,720) Operating loss Adjustments to reconcile operating loss to net cash provided by (used for) operating activities: Depreciation Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Prepaid expenses Increase (decrease) in liabilities: Accounts payable Due to other governments Other current liabilities $ Parking Garages (161) 283 336 $ 619 14 50 (2) 12 50 (358) 21 5 5 (337) 5 310 305 Net cash provided by (used for) operating activities Total Other Enterprise Funds $ (5,881) (5,426) $ 204 $ Noncash investing, capital and financing activities during the year ended June 30, 2008: Development Services enterprise fund received proceeds of $39 on the sale of capital assets with a net book value of $34, resulting in a gain on disposal of $5. 106 (5,222) Combining Statements and Other Schedules Internal Service Funds Internal Service Funds Self Insurance Trust Fund – to account for the risk management function of the County. The Fund provides self insurance coverage to the County for medical malpractice, workers’ compensation, unemployment, dental, general liability, environmental liability and property damage as well as acquiring coverage for other risks. Other Internal Service – to account for the acquisition, operation and maintenance of automotive equipment provided to County departments, as well as to account for the provision of printing, graphics and telecommunication services to County departments. PIMA COUNTY, ARIZONA Combining Statement of Net Assets Internal Service Funds June 30, 2008 (in thousands) Assets Current assets: Cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expense Total current assets Exhibit C-20 Self Insurance Trust Other Internal Service Total Internal Service Funds $ $ $ 42,721 152 588 26 653 44,140 Noncurrent assets: Capital assets: Land and other improvements Buildings and improvements Equipment Less accumulated depreciation Total capital assets (net of accumulated depreciation) Total noncurrent assets 11,060 20 826 180 121 558 44 12,809 592 Total assets Liabilities Current liabilities: Accounts payable Employee compensation Due to other funds Due to other governments Current portion reported but unpaid losses Current portion incurred but not reported losses Total current liabilities 53,781 172 1,414 180 147 558 697 56,949 243 (96) 614 33,121 (14,873) 592 614 33,364 (14,969) 739 739 18,862 18,862 19,601 19,601 44,879 31,671 76,550 301 116 1,446 655 840 5 1,747 771 840 5 3,908 2,321 9,592 3,908 2,321 6,646 2,946 Noncurrent liabilities: Other postemployment healthcare benefits Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities 44 15,514 9,462 25,020 137 137 181 15,514 9,462 25,157 Total liabilities 31,666 3,083 34,749 Net assets Invested in capital assets Unrestricted 739 12,474 18,862 9,726 19,601 22,200 Total net assets $ 13,213 107 $ 28,588 $ 41,801 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2008 (in thousands) Self Insurance Trust Operating revenues: Charges for services Other $ 19,363 327 Exhibit C-21 Total Internal Service Funds Other Internal Service $ 26,057 1,880 $ 45,420 2,207 Total operating revenues 19,690 27,937 47,627 Operating expenses: Employee compensation Operating supplies and services Utilities Incurred losses Insurance premiums General and administrative Repair and maintenance Consultants and professional services Depreciation Total operating expenses 2,238 196 31 10,227 3,923 1,428 74 359 20 18,496 5,160 6,722 886 988 1,293 3,893 76 2,739 21,757 7,398 6,918 917 10,227 4,911 2,721 3,967 435 2,759 40,253 Operating income 1,194 6,180 7,374 Nonoperating revenues (expenses): Investment earnings Loss on disposal of capital assets 1,752 354 (206) 2,106 (206) Total nonoperating revenues 1,752 148 1,900 Income before capital contributions and transfers: 2,946 6,328 9,274 Capital contributions 15 5 20 Transfers in Transfers (out) (6) Change in net assets Net assets at beginning of year Net assets at end of year $ 4,352 (4,352) 4,352 (4,358) 2,955 6,333 9,288 10,258 22,255 32,513 13,213 108 $ 28,588 $ 41,801 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2008 (in thousands) Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments for incurred losses Cash payments to employees for services Exhibit C-22 Self Insurance Trust Other Internal Service Total Internal Service Funds $ $ $ Net cash provided by (used for) operating activities 19,363 503 (5,618) (1,858) (11,879) (1,492) (981) 26,057 1,680 (11,759) (1,725) (4,888) 45,420 2,183 (17,377) (3,583) (11,879) (6,380) 9,365 8,384 Cash flows from noncapital financing activities: Loans with other funds 229 218 447 Net cash provided by noncapital financing activities 229 218 447 Cash flows from capital and related financing activities: Proceeds from sale of equipment Purchase of capital assets (17) 216 (4,260) 216 (4,277) Net cash used for capital and related financing activities (17) (4,044) (4,061) Cash flows from investing activities: Interest on cash and investments 1,921 347 2,268 Net cash provided by investing activities 1,921 347 2,268 Net increase in cash and cash equivalents 1,152 5,886 7,038 41,569 5,174 46,743 Cash and cash equivalents at beginning of year $ Cash and cash equivalents at end of year (Continued) 109 42,721 $ 11,060 $ 53,781 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2008 (in thousands) Exhibit C-22.1 (Continued) Reconciliation of operating income to net cash provided by (used for) operating activities Operating income Self Insurance Trust $ 1,194 Other Internal Service $ 6,180 Total Internal Service Funds $ 7,374 20 2,739 2,759 Adjustments to reconcile operating income to net cash provided by (used for) operating activities: Depreciation Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Due from other governments Inventory Prepaid expenses Increase (decrease) in liabilities: Accounts payable Due to other governments Reported but unpaid losses Incurred but not reported losses Other current liabilities Net cash provided by (used for) operating activities 176 (112) (88) (101) 19 78 (832) 451 5 (3,517) 1,865 35 $ (981) 64 (88) (101) 97 (381) 5 (3,517) 1,865 307 272 $ 9,365 $ 8,384 Noncash investing, capital and financing activities during the year ended June 30, 2008: Self Insurance Trust Fund transferred out capital assets with a net book value of $6 to the County's general government. Self Insurance Trust Fund transferred in capital assets with a net book value of $15 from the County's general government. Other Internal Service Funds (Communications) transferred in a capital asset with a net book value of $5 from the County's general government. Other Internal Service Funds (Fleet Services) sold capital assets with a net book value of $196. Other Internal Service Funds (Fleet Services) retired an asset with a net book value of $10. 110 Combining Statements and Other Schedules Fiduciary Funds PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Assets Investment Trust Funds June 30, 2008 (in thousands) Treasurer's Investment Pool Assets Cash and cash equivalents Interest receivable $ 205,444 522 Total assets Exhibit C-23 Total Investment Trust Funds Individual Investment Accounts $ 205,966 109,301 62 $ 109,363 314,745 584 315,329 Liabilities Total liabilities Net assets Held in trust for pool participants $ 205,966 111 $ 109,363 $ 315,329 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Assets Investment Trust Funds For the Year Ended June 30, 2008 (in thousands) Treasurer's Investment Pool Additions Contributions: Participants Total contributions $ Investment earnings: Total investment earnings Total additions Deductions Distributions to participants Total deductions Net increase (decrease) Net assets held in trust July 1, 2007 Net assets held in trust June 30, 2008 $ 112 2,552,025 2,552,025 Exhibit C-24 Total Investment Trust Funds Individual Investment Accounts $ 266,042 266,042 $ 2,818,067 2,818,067 8,220 8,220 4,139 4,139 12,359 12,359 2,560,245 270,181 2,830,426 2,570,338 243,511 2,813,849 2,570,338 243,511 2,813,849 (10,093) 26,670 16,577 216,059 82,693 298,752 205,966 $ 109,363 $ 315,329 PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Assets Agency Funds June 30, 2008 (in thousands) Treasurer's Clearing Payroll Assets Cash and cash equivalents Due from other governments $ Total assets $ 4,751 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 4,751 778 1,809 Exhibit C-25 Other $ 69,475 Total $ 2,587 69,475 76,813 2,587 46,048 23,427 4,751 46,048 26,014 4,751 $ 4,751 113 $ 75,004 1,809 2,587 $ 69,475 $ 76,813 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Assets Agency Funds For the Year Ended June 30, 2008 (in thousands) Payroll Clearing Assets Cash and cash equivalents Total assets Balance 06/30/07 $ Liabilities Employee compensation Total liabilities Additions 5,428 5,428 $ 5,428 5,428 Treasurer's Clearing Assets Cash and cash equivalents Due from other governments Total assets (1,724) 2,636 912 714,133 714,133 Exhibit C-26 Balance 06/30/08 Deductions $ 714,810 714,810 $ 4,751 4,751 714,133 714,133 714,810 714,810 4,751 4,751 2,060,715 1,809 2,062,524 2,058,213 2,636 2,060,849 778 1,809 2,587 Liabilities Due to other governments Deposits and rebates Total liabilities 912 912 1,039,714 1,022,810 2,062,524 1,039,714 1,021,135 2,060,849 2,587 2,587 Other Assets Cash and cash equivalents Total assets 71,521 71,521 465,492 465,492 467,538 467,538 69,475 69,475 Liabilities Due to other governments Deposits and rebates Total liabilities 45,680 25,841 71,521 147,627 317,865 465,492 147,259 320,279 467,538 46,048 23,427 69,475 Totals - All Agency Funds Assets Cash and cash equivalents Due from other governments Total assets 75,225 2,636 77,861 3,240,340 1,809 3,242,149 3,240,561 2,636 3,243,197 75,004 1,809 76,813 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 5,428 45,680 26,753 77,861 714,133 1,187,341 1,340,675 3,242,149 714,810 1,186,973 1,341,414 3,243,197 4,751 46,048 26,014 76,813 $ 114 $ $ $ PIMA COUNTY COUNTY PIMA Comprehensive Annual Financial Report 2008 For the Fiscal Year Ended June 30, 2007 INTRODUCTORY INTRODUCTORY SECTION SECTION FINANCIAL FINANCIAL SECTION SECTION STATISTICAL STATISTICAL SECTION SECTION Financial Financial Trends Trends Information Information Revenue Revenue Capacity Capacity Information Information Debt Debt Capacity Capacity Information Information Demographic Demographic and and Economic Economic Information Information Operating Operating Information Information 34!4)34)#!, STATISTICAL SECTION FINANCIAL TRENDS: The financial trends schedules are intended to provide users with information to assist them in understanding and assessing how a government’s financial position has changed over time. Financial trends information is considered to be a primary source of the historical perspective that helps users comprehend the direction in which a government’s economic condition is heading. It also serves the purpose of giving users a form of information that is among their most highly valued, comparative information over time. 115 Primary government Invested in capital assets, net of related debt Restricted for: Facilities, justice, library, tax stabilization and community development Special revenue Highways and streets Debt service Capital projects Worker's compensation Regional Wastewater Reclamation Department Healthcare Unrestricted Total primary government net assets Business-type activities Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Regional Wastewater Reclamation Department Healthcare Unrestricted (deficit) Total business-type activities net assets Governmental activities Invested in capital assets, net of related debt Restricted for: Special revenue Highways and streets Debt service Capital projects Worker's compensation Unrestricted Total governmental activities net assets $ 4,171 38,694 3,669 13,217 41,271 847,064 6,666 52,734 15,748 19,684 55,941 790,674 $ 29,322 716,720 1,245 3,008 3,669 13,217 (24,744) 440,985 444,590 43,339 $ $ 596,562 $ 1,216 18,982 15,748 19,684 (4,109) 432,437 $ $ 380,916 66,015 406,079 60,050 358,237 $ 2,926 35,686 5,450 33,752 272,130 29,322 $ 2003 43,339 215,646 $ $ $ 2002 $ $ $ $ $ $ 3,696 4,011 36,254 962,641 6,185 17,456 52,363 842,676 499 88 3,696 4,011 (4,766) 454,690 451,162 41,020 507,951 5,686 17,368 52,363 391,514 2004 PIMA COUNTY, ARIZONA Net Assets by Component Last Seven Fiscal Years (in thousands) (accrual basis of accounting) $ $ $ $ $ $ 11,907 27,027 9,042 3,511 6,319 54,302 1,370,950 59,789 1,199,053 $ $ $ 48,379 5,464 53,748 1,495,175 53,384 21,353 8,372 77,088 1,227,387 48,379 5,464 15,284 535,822 3,511 6,319 20,851 488,749 466,257 38,464 959,353 53,384 21,353 7,934 77,088 761,130 438 $ $ $ 2006 468 457,600 11,439 27,027 9,042 33,451 882,201 59,789 741,453 Fiscal Year 2005 38,628 9,985 57,101 $ 1,571,913 63,014 16,734 9,554 125,947 $ 1,250,950 574 35,480 38,628 9,985 10,845 $ 572,462 $ 476,950 46,256 $ 999,451 63,014 16,734 8,980 90,467 $ 774,000 2007 71,618 17,390 13,612 80,922 882,424 791 37,925 5,956 13,732 56,397 597,623 482,822 5,956 13,732 110,175 $ 1,717,367 17,390 14,403 118,847 71,618 $ 1,365,246 $ $ 53,778 $ 1,119,744 $ 2008 Exhibit D-1 116 $ 18,667 10,804 5,339 7,822 1,037 1,662 196 121,587 5,665 172,779 6,971 1,379 1,787 214 121,934 18,207 185,448 74,816 221,970 8,373 1,346 306,505 802,847 23,917 84,457 31,326 35,033 820 654 15,779 496,342 131,925 132,939 39,492 21,542 8,498 4,916 $ $ 2003 $ $ 8,772 918 1,709 101 135,119 17,413 207,471 21,422 10,289 11,728 71,804 268,869 9,617 1,377 351,667 876,150 30,165 76,894 32,727 33,093 805 967 15,012 524,483 140,827 151,860 42,133 2004 $ $ 1,797 314 133,113 12,188 217,422 1,643 298 125,121 23,663 210,666 82,701 256,583 14,422 1,479 355,185 1,002,494 165 19,463 647,309 208,293 132,583 70,392 7,258 32,043 103,085 34,510 39,517 9,526 $ $ 2006 26,033 8,136 21,617 4,531 9,693 22,881 6,985 20,549 76,079 249,809 10,857 1,494 338,239 931,474 31,798 96,199 29,663 39,714 849 161 16,152 593,235 194,873 118,412 65,414 Fiscal Year 2005 * Due to the changes in the County's asset management system in fiscal year 2005-2006, depreciation - unallocated is included in the general government activities. Program revenues Governmental activities: Charges for services General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Operating grants and contributions Capital grants and contributions Subtotal governmental activities program revenues 65,494 195,445 7,917 1,254 270,110 750,210 Business-type activities: Regional Wastewater Reclamation Department Pima Health System & Services Development Services Parking Garages Total business-type activities expenses Total primary government expenses 137,296 123,513 42,515 23,120 73,243 27,081 37,565 727 649 14,391 480,100 $ Expenses Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Depreciation-unallocated * Amortization-unallocated Interest on long-term debt Total governmental activities expenses 2002 PIMA COUNTY, ARIZONA Changes in Net Assets Last Seven Fiscal Years (in thousands) (accrual basis of accounting) $ $ 2,991 698 139,324 15,085 221,307 26,663 9,797 11,732 4,747 10,270 98,222 261,859 15,400 1,579 377,060 1,099,776 168 18,924 722,716 223,266 148,831 92,985 9,623 33,800 97,154 55,482 42,483 2007 $ $ (continued) 3,031 716 144,479 48,672 257,161 25,502 9,550 9,316 5,930 9,965 106,803 295,494 14,750 1,877 418,924 1,196,617 138 22,860 777,693 239,399 165,715 88,488 9,658 36,977 106,546 60,616 47,296 2008 Exhibit D-2 117 63,909 20,843 84,752 Change in net assets Governmental activities Business-type activities Total primary government $ 390,878 13,954 32,317 905 2,888 3,309 11,261 (13,954) 358,561 237,049 2,495 1,600 76,752 21,093 9,550 5,479 8,157 10,340 Total primary government Business-type activities: State shared tax Investment earnings Miscellaneous Capital contributions Extraordinary item Transfers Total business-type activities General revenues and other changes in net assets Governmental activities: Taxes Property taxes Hotel/motel taxes Other taxes levied for stadium district Shared sales tax Shared vehicle licenses Unrestricted grants and contributions Interest and penalties on delinquent taxes Investment earnings Miscellaneous Capital contributions Gain on sale of capital assets Extraordinary item Transfers Total governmental activities (294,652) (11,474) (306,126) Net (expense) revenue Governmental activities Business-type activities Total governmental activities net expense 63,601 179,322 7,754 1,454 6,505 258,636 444,084 $ 2002 Program revenues Business-type activities: Charges for services Regional Wastewater Reclamation Department Pima Health System & Services Development Services Parking Garages Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues (continued) $ $ 44,311 12,079 56,390 404,174 959 1,727 5,828 12,479 (2,673) 17,980 36,300 85,496 13,705 99,201 442,561 13,196 40,053 1,146 747 2,750 22,214 (13,196) 402,508 (7,447) (17,980) 367,874 (317,012) (26,348) (343,360) 325,319 532,790 82,432 224,820 11,830 1,460 4,777 272,507 2,745 1,709 83,202 23,413 3,201 6,321 3,102 14,063 5,441 $ $ 2004 251,844 2,557 1,597 78,504 21,904 9,216 7,052 5,064 12,774 2,789 (323,563) (24,221) (347,784) 282,284 455,063 71,626 195,872 8,464 1,413 4,909 2003 $ $ 70,711 43,971 114,682 477,704 (1,935) 24,424 1,163 1,609 2,865 20,722 1,935 453,280 294,643 2,822 1,819 91,510 23,630 7,571 6,771 6,140 16,254 185 (382,569) 19,547 (363,022) 357,786 568,452 92,379 244,932 14,730 1,507 4,238 Fiscal Year 2005 PIMA COUNTY, ARIZONA Changes in Net Assets Last Seven Fiscal Years (in thousands) (accrual basis of accounting) $ $ 63,863 47,073 110,936 513,688 134 19,938 3,849 1,348 14,607 (134) 493,750 316,170 6,856 1,808 103,158 25,894 7,975 5,683 12,942 12,828 247 323 (429,887) 27,135 (402,752) 104,501 253,748 17,140 1,485 4,997 449 382,320 599,742 2006 $ $ 39,804 36,640 76,444 572,741 (721) 31,528 5,510 1,522 25,217 721 541,213 343,525 8,715 1,884 106,985 26,967 9,468 5,149 16,439 16,309 5,051 (501,409) 5,112 (496,297) 106,266 257,142 11,239 1,548 5,174 803 382,172 603,479 2007 $ $ 43,711 25,868 69,579 572,137 (113) 7,894 6,721 1,286 113 564,243 377,810 8,176 1,952 103,171 27,166 7,748 6,365 16,326 15,416 (520,532) 17,974 (502,558) 106,448 291,980 8,992 1,720 4,806 22,952 436,898 694,059 2008 Exhibit D-2 118 Total all other governmental funds All other governmental funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds General Fund Reserved Unreserved Total general fund $ $ 72,166 78,987 40,785 27,790 27,114 34,580 1,846 24,721 26,567 10,412 $ $ 2000 10,472 2,479 6,030 8,509 1999 $ $ 88,778 48,616 30,986 9,176 2,233 19,653 21,886 2001 $ $ 116,661 61,134 46,985 8,542 2,486 28,656 31,142 2002 $ $ 131,847 42,312 82,793 6,742 $ $ Fiscal Year 2,549 30,999 33,548 2003 PIMA COUNTY, ARIZONA Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts in thousands) (modified accrual basis of accounting) 150,198 45,325 97,270 7,603 7,068 25,628 32,696 2004 $ $ 214,780 54,384 147,650 12,746 4,056 33,171 37,227 2005 $ $ 162,423 66,167 84,472 11,784 5,152 46,423 51,575 2006 $ $ 173,100 69,773 89,328 13,999 8,889 48,671 57,560 2007 $ $ 247,188 77,451 152,643 17,094 5,415 64,974 70,389 2008 Exhibit D-3 119 Debt service as a percentage of noncapital expenditures Net change in fund balances Extraordinary item Residual equity - net Change in reserves - net Total other financing sources (uses) Refunding bonds Issuance cost on bonds Premium on bonds Payments to refunded bond escrow agent Capital leases Proceeds from sale of capital assets Face amount of long-term debt Transfers in Transfers (out) Other financing sources (uses): Excess (deficiency) of revenues over (under) expenditures Total expenditures Expenditures General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service - principal - interest - miscellaneous Total revenues Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Revenues $ $ 13.59% (30,855) 1,588 92 591 332 307 25,976 (26,024) 11.65% 23,063 348 160 40,995 54,129 33,084 (46,218) (18,440) 531,630 491,811 (33,126) 22,579 69,368 20,263 33,135 89,215 37,480 13,981 83 20,142 69,687 19,447 30,103 66,671 42,833 14,860 76 513,190 214,332 703 4,541 241,225 27,308 4,245 11,384 9,452 110,022 109,815 25,689 $ $ 2000 102,390 103,679 21,923 458,685 194,948 874 4,306 211,006 24,404 3,930 9,009 10,208 1999 $ $ 11.76% 3,047 4,315 (107) 12,417 50,358 34,335 (72,276) (13,578) 555,287 22,584 71,260 22,242 32,458 87,673 39,823 15,003 186 122,023 117,058 24,977 541,709 227,542 845 4,882 253,863 26,613 4,365 15,468 8,131 2001 $ $ 10.26% 35,964 50 70,271 81,921 52,753 (65,658) 796 (22,551) 590 22,420 (34,357) 597,146 23,102 73,136 25,581 37,524 109,670 37,342 14,128 391 125,416 123,021 27,835 562,789 244,807 598 6,077 260,218 31,112 4,882 6,952 8,143 2002 $ $ 11.56% 17,592 629 (6,237) 70,321 177 37 85,000 78,457 (93,597) (163) 410 (47,121) 613,260 24,029 84,238 25,214 35,057 97,147 45,544 15,695 24 132,416 127,155 26,741 566,139 $ $ Fiscal Year 258,375 1,023 6,087 245,378 35,721 5,047 4,152 10,356 2003 11.53% 17,499 (366) 44,255 406 65,000 68,583 (89,916) 148 (6,846) 6,880 (26,390) 649,302 30,322 76,725 27,141 32,146 103,167 49,025 14,851 161 140,319 146,275 29,170 622,912 279,527 505 6,566 273,225 43,505 5,010 2,656 11,918 2004 PIMA COUNTY, ARIZONA Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts in thousands) (modified accrual basis of accounting) $ $ 9.87% 69,113 385 119,523 27 116,200 50,008 (46,962) 250 (50,795) 717,212 30,802 96,996 23,172 38,098 127,632 42,891 16,127 25 193,308 109,798 38,363 666,417 300,972 244 7,265 278,414 53,568 5,967 5,181 14,806 2005 $ $ 10.90% (38,009) (177) 9,168 231 416 4,836 59,948 (56,263) (47,000) 761,343 203,881 121,229 39,394 6,271 30,038 103,034 28,561 37,918 121,007 50,547 19,448 15 714,343 321,474 215 7,452 291,059 63,582 6,014 11,382 13,165 2006 $ $ 9.88% 16,368 (211) 148,576 1,426 146,320 86,089 (86,688) 1,429 (131,997) 893,332 222,434 132,930 42,683 6,766 32,311 97,168 45,197 38,474 202,659 53,733 18,965 12 761,335 348,700 521 7,132 303,392 63,508 6,550 13,988 17,544 2007 $ $ 10.48% 86,917 (55) 178,017 312 27 175,000 128,406 (127,692) 1,964 (91,045) 895,147 237,640 149,475 43,741 8,310 34,352 106,607 50,509 42,286 139,539 59,719 22,639 330 804,102 381,862 556 7,710 312,634 58,890 6,480 14,218 21,752 2008 Exhibit D-4 (This page is intentionally blank) 120 STATISTICAL SECTION REVENUE CAPACITY: The revenue capacity information is intended to assist users to understand and assess the factors affecting a government’s ability to generate its own-source revenues. The presentation here is not limited to property tax revenues, but certain other revenues are presented to comply with debt disclosure requirements, e.g., hotel taxes, car rental and RV taxes and street and highway revenues. 121 2,154,367 2,324,927 2,494,934 2,709,068 2,955,066 3,265,040 3,615,603 4,076,600 4,689,972 5,352,916 $ 236,602 239,298 246,938 263,270 281,243 302,323 323,147 359,662 428,486 493,055 $ 15,682 15,253 17,692 18,348 21,508 21,595 27,920 29,803 30,802 35,442 $ 3,853,630 4,111,664 4,361,493 4,669,335 5,022,474 5,412,550 5,849,549 6,467,202 7,353,331 8,239,672 5.5651 5.5635 5.5828 5.4998 5.4981 5.4967 5.4611 5.3406 5.0674 4.6702 Total Direct Tax Rate $ 32,801,718 34,898,941 37,257,921 39,908,791 42,927,737 46,754,009 50,631,267 56,437,790 64,347,659 73,122,499 Estimated Limited Value 11.75% 11.78% 11.71% 11.70% 11.70% 11.58% 11.55% 11.46% 11.43% 11.27% Assessed Value as a Percentage of Limited Value Property in Pima County is assessed annually with values being set by either the County Assessor or the Arizona Department of Revenue. The values are the basis for Primary Taxes and annual changes therein are restricted by the State Constitution. Assessment ratios are set by the legislature for individual property types. The taxable assessed value is arrived at by multiplying an assessment ratio that has varied from ten percent for residential property, to twenty-five percent for commercial property. Tax rates are per $100 of assessed value. $ Other Taxable Assessed Value Notes: 1,446,979 1,532,186 1,601,929 1,678,649 1,764,657 1,823,592 1,882,879 2,001,137 2,204,072 2,358,259 Vacant Land Pima County Assessor's Office. $ Residential Property Exhibit D-5 Source: 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Tax Year Commercial Property PIMA COUNTY, ARIZONA Taxable Assessed Value and Estimated Actual Value of Property Last Ten Tax Years (in thousands) 122 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 Tax Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0.5217 0.5123 0.4974 0.4889 0.4717 0.4560 0.4358 0.0000 0.0000 0.0000 Education Assistance 1.3696 1.5574 1.5470 1.5333 1.4884 1.3428 1.3114 1.2515 1.1845 1.1355 Community College District 1.0238 1.1270 1.1202 1.1202 1.1569 1.1847 1.2364 1.2257 1.1321 0.9601 City of Tucson 0.2937 0.2918 0.2828 0.2706 0.2513 0.2383 0.2383 0.2383 0.2258 0.2143 City of South Tucson 6.9300 6.9300 10.4000 10.4000 10.4000 12.9000 12.9000 12.9000 12.9000 19.3500 Flowing Wells Irrigation District (2) Central AZ Water Conserv District 0.1400 0.1300 0.1300 0.1300 0.1200 0.1200 0.1200 0.1200 0.1000 0.1000 0.9350 0.9350 0.8950 0.8150 0.8150 0.8150 0.7150 0.7150 0.6850 0.6050 County Secondary 4.0720 4.0720 4.0720 4.0720 4.0720 4.0720 4.0720 3.8420 3.6020 3.3913 County Primary 1.0000 1.0000 24.7500 24.7500 50.0000 60.0000 60.0000 60.0000 65.0000 66.0000 0.5000 0.5000 0.5000 Mobile Home Relocation District (3) Overlapping Rates CortaroSilverbell Marana Irrigation Irrigation District (2) District (2) 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 0.0511 0.0495 0.0488 0.0458 0.0441 0.0427 0.0420 0.0415 0.0383 0.0411 Fire District Assistance 0.2024 0.2024 0.2124 0.2124 0.2124 0.2124 0.2575 0.3675 0.3975 0.3393 0.3046 0.3046 0.3546 0.3546 0.3546 0.3546 0.3746 0.3746 0.3446 0.2935 Notes: Primary and secondary tax rates (per $100 of net assessed value) are set by the County Board of Supervisors or the governing boards of other taxing jurisdictions. (A) The Towns of Marana, Oro Valley and Sahuarita do not currently levy a property tax. (B) The Tucson Business Improvement District levy (on a per-business basis) is not shown. (1) The Pima County Flood Control District tax levy applies only to real property. (2) Irrigation Districts' tax rates shown are levied on a per acre basis. (3) Mobile Home Relocation levy applies only to unsecured mobile homes (not presented after 2001-02). State of Arizona 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Tax Year County Direct Rates Flood County Control Library District (1) District 0.1438 Town of Casas Adobes Incorporation Costs 5.5651 5.5635 5.5828 5.4998 5.4981 5.4967 5.4611 5.3406 5.0674 4.6702 Total PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates Last Ten Tax Years (per $100 of assessed value) 0.2313 Town of Tortolita Incorporation Costs 2.8000 2.8000 2.8000 2.8000 2.8000 Gladden Farms Community Facilities District 0.3000 0.3000 0.3000 Vanderbilt Farms Community Facilities District 3.3000 3.3000 Quail Creek Community Facilities District Exhibit D-6 123 8.8612 7.1715 Flowing Wells Unified (#8) Amphitheater Unified (#10) 7.7641 6.3348 2.1654 Redington Elementary (#44) Altar Valley Elementary (#51) Unorganized* 2.1265 6.5620 5.0186 9.1002 2.4983 2.0647 6.3052 6.3661 2.4346 7.6596 2.0296 6.3035 6.4230 2.4398 6.6965 1.9583 6.3615 5.6853 2.3198 6.4699 *County Education District; applies only to those geographical areas within Pima County not part of formal school districting. 10.4568 2.5439 Indian Oasis Unified (#40) Continental Elementary (#39) 8.5371 9.0113 7.1748 7.0256 5.3016 7.1785 9.1041 6.7601 6.6568 6.7979 8.7610 2003 1.8931 6.2759 3.9915 2.2216 6.1171 8.3095 7.0008 6.6459 4.4316 5.6661 8.4846 6.3375 6.5883 6.5034 8.3286 2004 8.1495 6.7510 6.8422 4.4994 5.7985 8.6482 6.4258 7.1232 6.0991 7.8829 2005 1.8090 6.2607 4.8856 2.1532 8.0930 10.3858 9.1329 7.2295 7.0956 4.1555 6.6818 9.6945 7.0207 7.2175 7.3623 9.2780 2002 Empire Elementary (#37) 8.7860 7.2314 7.5344 7.0508 6.8484 10.3706 7.4427 8.0490 7.7028 9.8088 2001 3.7121 8.7007 7.2604 7.7258 6.0973 6.9434 10.3609 6.8816 8.4928 7.5418 9.0494 2000 San Fernando Elementary (#35) 8.3204 Sahuarita Unified (#30) 7.8515 Catalina Foothills Unified (#16) 7.3298 4.6791 Ajo Unified (#15) Vail Elementary (#20) 6.8939 Tanque Verde Unified (#13) 10.6897 7.6408 Marana Unified (#6) Sunnyside Unified (#12) 8.7869 1999 Tucson Unified (#1) School District PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates - School Districts Last Ten Tax Years (per $100 of assessed value) 1.7394 5.7696 4.8853 2.0682 8.4864 3.7481 7.7345 6.7032 6.7428 4.4929 5.4806 9.1529 6.1193 6.8677 5.9117 7.3857 2006 1.6020 5.8086 4.8952 1.8970 7.5703 3.7900 6.1807 6.0327 6.3942 4.8627 5.1033 8.1490 5.4964 6.5674 5.7887 7.0500 2007 1.4622 5.7451 7.4720 1.7343 4.9021 3.7920 5.9176 5.5360 6.1053 4.5964 4.3682 7.8009 4.8589 6.2665 5.4815 6.5659 2008 Exhibit D-6a 124 $ 5 10 7 6 9 8 4 3 2 1 Rank 10.9% * * Name change 2001 (1) Secondary Assessed Valuation for tax year 0.0% 0.0% 0.7% 0.3% 0.0% 0.4% 0.0% 0.0% 0.5% 0.3% 0.4% 0.9% 1.2% 2.0% 4.2% 0.0% Percent of Total Assessed Value $ 4,000,624 Sources: Arizona Department of Revenue, Pima County Assessor's Office. 428,665 0 HDP Northwest Total Top Ten 0 27,300 Cyprus/Sierrita Mining Co. AT&T 12,983 0 Ventana Hotel Associates El Conquistador Hotel 15,669 Westin La Paloma 18,910 DND Neffson (Tucson Mall) 0 13,363 Arizona Portland Cement Star Pass Resorts 14,193 Raytheon/Hughes Aircraft ** 0 35,170 ASARCO Mining TRICO 46,441 Southwest Gas Corporation 166,300 78,336 $ 0 QWEST Tucson Electric Power Co. Phelps Dodge Taxpayer Estimated Assessed Value (1) 1999 $ 403,536 0 0 20,000 12,950 0 15,097 0 0 15,168 13,146 14,193 21,200 46,191 78,642 $ 166,949 0 Estimated Assessed Value (1) 5 10 7 6 9 8 4 3 2 1 Rank 2000 $ 4,236,070 9.6% 0.0% 0.0% 0.5% 0.3% 0.0% 0.4% 0.0% 0.0% 0.4% 0.3% 0.3% 0.5% 1.1% 1.9% 3.9% 0.0% Percent of Total Assessed Value $ 384,569 0 14,292 0 0 13,632 16,183 0 0 19,362 16,614 13,642 18,911 51,214 84,382 $ 136,337 0 Estimated Assessed Value (1) 8 10 7 4 6 9 5 3 2 1 Rank 2001 $ 4,491,395 8.5% 0.0% 0.3% 0.0% 0.0% 0.3% 0.4% 0.0% 0.0% 0.4% 0.4% 0.3% 0.4% 1.1% 1.9% 3.0% 0.0% Percent of Total Assessed Value PIMA COUNTY, ARIZONA Principal Property Taxpayers Current Year and Nine Years Ago (amounts in thousands) 0 0 0 0 13,898 16,703 0 0 18,733 18,213 13,349 27,736 53,668 87,757 137,315 18,250 $ 405,622 $ Estimated Assessed Value (1) 9 8 5 7 10 4 3 2 1 6 Rank 2002 $4,835,561 8.4% 0.0% 0.0% 0.0% 0.0% 0.3% 0.3% 0.0% 0.0% 0.4% 0.4% 0.3% 0.6% 1.1% 1.8% 2.8% 0.4% Percent of Total Assessed Value 0 0 0 0 14,461 16,057 0 11,467 18,703 19,990 13,290 0 55,710 108,829 122,499 14,375 $ 395,381 $ Estimated Assessed Value (1) 7 6 10 5 4 9 3 2 1 8 Rank 2003 (continued) $5,221,271 7.7% 0.0% 0.0% 0.0% 0.0% 0.3% 0.3% 0.0% 0.2% 0.4% 0.4% 0.3% 0.0% 1.1% 2.1% 2.3% 0.3% Percent of Total Assessed Value Exhibit D-7 125 Taxpayer 0 0 AT&T HDP Northwest 8 6 10 5 4 9 3 2 1 7 Rank 2004 7.2% 0.0% 0.0% 0.0% 0.0% 0.3% 0.3% 0.0% 0.2% 0.3% 0.4% 0.2% 0.0% 1.1% 1.9% 2.2% 0.3% Percent of Total Assessed Value * * Name change 2001 (1) Secondary Assessed Valuation for Tax Year $5,620,156 Sources: Arizona Department of Revenue, Pima County Assessor's Office. $ 403,397 0 Cyprus/Sierrita Mining Co. Total Top Ten 0 14,655 El Conquistador Hotel Ventana Hotel Associates 15,943 Westin La Paloma 0 12,925 TRICO Star Pass Resorts 19,364 21,296 Arizona Portland Cement DND Neffson (Tucson Mall) 13,895 0 59,528 Raytheon/Hughes Aircraft ** ASARCO Mining Southwest Gas Corporation 104,944 QWEST 15,250 125,597 $ Estimated Assessed Value (1) Tucson Electric Power Co. Phelps Dodge (continued) $ $ 440,208 14,708 0 0 0 13,653 16,358 0 22,377 22,459 16,069 0 62,970 104,468 145,937 21,209 Estimated Assessed Value (1) 9 10 7 5 4 8 3 2 1 6 Rank 2005 $6,050,950 7.3% 0.2% 0.0% 0.0% 0.0% 0.2% 0.3% 0.0% 0.0% 0.4% 0.4% 0.3% 0.0% 1.0% 1.7% 2.4% 0.4% Percent of Total Assessed Value $ $ 459,465 0 0 0 0 0 15,504 17,068 14,806 19,087 22,858 21,665 0 62,846 87,093 143,362 55,176 Estimated Assessed Value (1) 9 8 10 7 5 6 3 2 1 4 Rank 2006 $6,869,955 6.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.0% 0.9% 1.3% 2.1% 0.8% Percent of Total Assessed Value PIMA COUNTY, ARIZONA Principal Property Taxpayers Current Year and Nine Years Ago (amounts in thousands) 0 0 0 0 0 15,959 15,280 18,044 19,897 23,468 58,987 0 62,919 94,300 150,771 93,656 $ 553,281 $ Estimated Assessed Value (1) 9 10 8 7 6 5 4 2 1 3 Rank 2007 $8,220,396 6.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.2% 0.3% 0.7% 0.0% 0.8% 1.1% 1.8% 1.1% Percent of Total Assessed Value $ 618,100 0 0 0 0 0 0 15,889 18,816 21,013 23,593 33,833 44,047 63,698 87,000 153,431 $ 156,780 Estimated Assessed Value (1) 10 9 8 7 6 5 4 3 2 1 Rank 2008 $9,594,862 6.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.2% 0.4% 0.5% 0.7% 0.9% 1.6% 1.6% Percent of Total Assessed Value Exhibit D-7 126 NOTES: Amount 172,330 192,409 204,424 218,192 231,619 250,929 271,841 292,019 318,520 348,741 Amounts collected are on a cash basis rather than the modified accrual basis used in the financial statements. $ Percent of Original Levy 95.45% 95.29% 95.24% 95.50% 95.94% 96.30% 96.68% 96.65% 96.45% 96.20% (2) Real Property Tax Levy (Adjusted) $ 178,997 200,758 213,668 227,454 240,403 259,583 280,678 302,049 329,918 361,933 Represents the difference between the adjusted levy and collected to June 30, 2008. Tax Roll Corrections $ (1,553) (1,167) (974) (1,023) (1,013) (987) (494) (78) (322) (602) (1) Fiscal Year 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Original Real Property Tax Levy $ 180,550 201,925 214,642 228,477 241,416 260,570 281,172 302,127 330,240 362,535 Collected to June 30, End of Tax Fiscal Year (2) Collections in Subsequent Years $ 7,159 8,561 9,154 8,986 8,666 8,635 8,667 9,445 11,002 PIMA COUNTY, ARIZONA Real Property Tax Levies and Collections Last Ten Fiscal Years (in thousands) $ Amount 179,489 200,970 213,578 227,178 240,285 259,564 280,508 301,464 329,522 348,741 Percent of Adjusted Levy 100.27% 100.11% 99.96% 99.88% 99.95% 99.99% 99.94% 99.81% 99.88% 96.36% Collected to June 30, 2008 (2) Delinquent Taxes Receivable (1) $ (492) (212) 90 276 118 19 170 585 396 13,192 Exhibit D-8 PIMA COUNTY, ARIZONA Assessed, Limited and Full Cash (Secondary) Value of Taxable Property Last Ten Fiscal Years (in thousands) Fiscal Year 1998-99 Primary 1998-99 Secondary Limited and Full Cash Values (1) Net Assessed Value $ 3,682,397 3,852,574 $ Exhibit D-9 Ratio of Net Assessed to Full Cash Value 33,930,287 35,297,284 10.85% 10.91% 1999-00 Primary 1999-00 Secondary 3,853,630 4,000,624 32,801,718 33,893,530 11.75% 11.80% 2000-01 Primary 2000-01 Secondary 4,111,664 4,236,070 34,898,941 35,819,691 11.78% 11.83% 2001-02 Primary 2001-02 Secondary 4,361,493 4,491,395 37,257,921 38,196,337 11.71% 11.76% 2002-03 Primary 2002-03 Secondary 4,669,336 4,835,561 39,908,791 41,109,997 11.70% 11.76% 2003-04 Primary 2003-04 Secondary 5,022,474 5,221,271 42,927,737 44,423,165 11.70% 11.75% 2004-05 Primary 2004-05 Secondary 5,412,550 5,620,156 46,754,009 48,474,537 11.58% 11.59% 2005-06 Primary 2005-06 Secondary 5,849,549 6,050,950 50,631,267 52,335,111 11.55% 11.56% 2006-07 Primary 2006-07 Secondary 6,467,202 6,869,955 56,437,790 59,890,229 11.46% 11.47% 2007-08 Primary 2007-08 Secondary 7,353,331 8,220,396 64,347,659 72,101,321 11.43% 11.40% (1) Limited value is the basis for primary taxes and annual changes therein are restricted by statute; Full Cash Value or Secondary Value approximates market value. 127 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates (per $100 assessed value) (valuation $ amounts in thousands) Jurisdiction State of Arizona FY 2007-08 (Tax Year 2007) Valuation Rate $ 7,353,331 $0.0000 Pima County General Fund - Primary Debt Service - Secondary Free Library - Secondary Exhibit D-10 FY 2008-09 (Tax Year 2008) Valuation Rate $ 8,230,967 $0.0000 7,353,331 8,220,396 8,220,396 3.6020 0.6850 0.3975 8,230,967 9,594,862 9,594,862 3.3913 0.6050 0.3393 7,353,331 8,220,396 3.6020 1.0825 4.6845 8,230,967 9,594,862 3.3913 0.9443 4.3356 Education Assistance 7,353,331 0.0000 8,230,967 0.0000 Flood Control District - Secondary 7,412,190 0.3446 8,684,572 0.2935 Fire District Assistance - Secondary 8,220,396 0.0383 9,594,862 0.0411 Pima Community College District Primary Secondary Total 7,353,331 8,220,396 1.0191 0.1654 1.1845 8,230,967 9,594,862 0.9787 0.1502 1.1289 8,220,396 0.1000 9,594,862 0.1000 3,133,310 3,484,462 0.3296 0.8025 1.1321 3,378,331 3,895,582 0.3231 0.6370 0.9601 City of South Tucson Primary 20,445 0.2258 22,175 0.2143 School Districts Unorganized - Primary 11,225 1.6020 11,950 1.4622 3,079,057 3,436,035 5.7500 1.3000 7.0500 3,334,344 3,866,799 5.3565 1.2094 6.5659 Total County - Primary Total County - Secondary Grand Total Central Arizona Water Conservation District Secondary Cities & Towns City of Tucson Primary Secondary Total Tucson Unified (District #1) Primary Secondary Total (continued) 128 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates (per $100 assessed value) (valuation $ amounts in thousands) Exhibit D-10 (continued) Jurisdiction Marana Unified (District #6) Primary Secondary Total FY 2007-08 (Tax Year 2007) Valuation Rate 656,187 750,524 $3.8368 1.9519 5.7887 Flowing Wells Unified (District #8) Primary Secondary Total 191,524 211,004 4.4196 2.1478 6.5674 206,794 234,267 4.2244 2.0421 6.2665 Amphitheater Unified (District #10) Primary Secondary Total 1,322,814 1,491,531 3.7983 1.6981 5.4964 1,468,535 1,714,181 3.3570 1.5019 4.8589 Sunnyside Unified (District #12) Primary Secondary Total 389,900 427,586 4.6857 3.4633 8.1490 434,350 488,676 4.6010 3.1999 7.8009 Tanque Verde Unified (District #13) Primary Secondary Total 175,387 203,700 3.7882 1.3151 5.1033 198,996 238,434 3.4139 0.9543 4.3682 15,475 16,570 4.8627 0.0000 4.8627 16,539 18,351 4.5964 0.0000 4.5964 Catalina Foothills Unified (District #16) Primary Secondary Total 564,911 634,764 4.1359 2.2583 6.3942 620,912 717,981 4.1353 1.9700 6.1053 Vail Elementary (District #20) Primary Secondary Total 362,131 414,651 4.0570 1.9757 6.0327 433,249 521,677 3.9845 1.5515 5.5360 Ajo Unified (District #15) Primary Secondary Total $ FY 2008-09 (Tax Year 2008) Valuation Rate $ 788,663 952,444 $ 3.7725 1.7090 5.4815 (continued) 129 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates (per $100 assessed value) (valuation $ amounts in thousands) Exhibit D-10 (continued) Jurisdiction Sahuarita Unified (District #30) Primary Secondary Total FY 2007-08 (Tax Year 2007) Valuation Rate 248,840 267,294 $4.0631 2.1176 6.1807 858 880 3.7900 0.0000 3.7900 1,032 1,119 3.7920 0.0000 3.7920 5,374 5,792 7.5703 0.0000 7.5703 6,073 6,945 4.9021 0.0000 4.9021 278,996 312,815 1.6020 0.2950 1.8970 323,703 390,323 1.5067 0.2276 1.7343 Indian Oasis Unified (District #40) Primary Secondary Total 1,059 1,059 0.0000 0.0000 0.0000 1,586 1,586 0.0000 0.0000 0.0000 Redington Elementary (District #44) Primary Secondary Total 1,272 1,387 4.8952 0.0000 4.8952 1,428 1,541 7.4720 0.0000 7.4720 29,071 30,747 4.8733 0.9353 5.8086 33,416 41,902 5.2462 0.4989 5.7451 San Fernando Elementary (District #35) Primary Secondary Total Empire Elementary (District #37) Primary Secondary Total Continental Elementary (District #39) Primary Secondary Total Altar Valley Elementary (District #51) Primary Secondary Total $ FY 2008-09 (Tax Year 2008) Valuation Rate 130 $ 357,366 384,176 $ 3.8010 2.1166 5.9176 PIMA COUNTY, ARIZONA Historical Collections - Hotel Excise Tax, Car Rental Surcharges and Recreational Vehicle Tax Last Ten Fiscal Years (amounts in thousands) Fiscal Year 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Car Rental Surcharges (2) Hotel Excise Tax (1) $ 2,438 2,625 2,824 2,495 2,536 2,717 2,885 5,212 7,796 6,901 $ 1,396 1,477 1,557 1,377 1,436 1,277 1,595 1,589 1,357 1,732 Recreational Vehicle Tax (3) $ (1) Tax increased from 1% to 2% January 1, 1997; the additional 1% can only be used for County sports facilities. In January of 2006, the tax increased from 2% to 6%, of which only 34% can be used for sports facilities. (2) Car rental surcharges increased from $2.50 to $3.50 per rental contract July 1, 1996. Usage is restricted to County sports facilities. (3) Recreational vehicle taxes apply at the rate of $0.50 per vehicle per night and became effective July 1, 1997. Usage of this tax is limited to Spring Training activities. Source: Pima County Finance and Risk Management Department 131 Exhibit D-11 217 213 199 190 195 209 200 214 210 222 PIMA COUNTY, ARIZONA Streets and Highways Revenues Last Ten Fiscal Years (amounts in thousands) Fiscal Year Amount 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 $ 39,535 47,699 48,317 47,071 48,072 51,334 53,878 56,937 44,607 44,060 Source: Pima County Finance and Risk Management Department 132 Exhibit D-12 STATISTICAL SECTION DEBT CAPACITY: The debt capacity information is intended to assist users to understand and assess a government’s debt burden and ability to issue debt. Debt capacity information is cited as being very useful for assessing economic condition as frequently as revenue or tax capacity. Five of the schedules presented provide tenyear comparisons. Certain schedules, for example; leases, lease-purchase and purchase agreements, are provided to comply with debt disclosure requirements. 133 $ 153,295 173,985 192,640 183,381 200,554 232,553 267,927 231,918 290,150 349,542 General Obligation Bonds $ 7,360 6,595 5,840 5,348 4,585 3,805 3,010 2,230 1,470 725 Flood Control Bonds $ 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Fiscal Year 36,000 32,000 28,000 79,206 105,541 95,461 137,736 127,000 136,541 149,801 Transportation Revenue Bonds 1,220 1,095 965 825 495 $ 339,192 349,955 370,881 440,959 483,463 515,686 584,227 530,644 664,089 845,872 Total Primary Government $ Lease Revenue Bonds $ $ 18,999,743 20,855,000 21,827,000 21,991,000 22,973,000 23,965,000 26,302,000 28,421,000 30,899,000 33,009,000 Personal Income 2,300 1,697 1,053 2,506 2,121 1,736 1,093 911 Special Assessment Bonds $ 1.79% 1.68% 1.70% 2.01% 2.10% 2.15% 2.22% 1.87% 2.15% 2.56% Percentage of Personal Income 31,731 81,612 8,945 6,725 4,505 3,045 1,560 Certificates of Participation Note: Details regarding outstanding debt can be found in Note 7 page 60 in Notes to the Financial Statements. (a) See schedule D-20 for population data. 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Fiscal Year Governmental Activities $ 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 Population at July 1 (a) 5,100 4,060 3,020 1,943 5,739 3,714 1,000 Transportation Loans $ $ 401 410 425 495 532 557 619 552 661 824 Debt per Capita 36,368 35,338 34,008 32,596 31,049 29,323 27,879 26,426 24,736 23,223 Capital Leases $ 79,473 75,564 71,444 67,811 63,098 60,064 55,809 51,710 94,356 163,701 Sewer Revenue Bonds $ 13,967 14,477 32,314 57,456 63,551 83,941 83,978 80,148 76,111 70,426 $ 264 2,479 112 3,685 6,849 5,783 4,852 4,562 5,280 5,842 Business-Type Activities Regional Wastewater Contracts Loans and Payable Notes PIMA COUNTY, ARIZONA Ratios of Outstanding Debt by Type to Personal Income and Per Capita Last Ten Fiscal Years ($ amounts in thousands) $ 339,192 349,955 370,881 440,959 483,463 515,686 584,227 530,644 664,089 845,872 Total Primary Government Exhibit D-13 134 153,295 173,985 192,640 183,381 200,554 232,553 267,927 231,918 290,150 349,542 Fiscal Year 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 $ 7,360 6,595 5,840 5,348 4,585 3,805 3,010 2,230 1,470 725 $ 6,827 6,249 4,309 4,883 2,226 2,648 8,899 5,571 7,431 10,241 Debt Service Funds Available for Principal $ 153,828 174,331 194,171 183,846 202,913 233,710 262,038 228,577 284,189 340,026 Net General Bond Debt $ 3,852,574 4,000,624 4,236,070 4,491,395 4,835,561 5,221,271 5,620,156 6,050,950 6,869,955 8,220,396 Secondary Net Assessed Value Note: Details regarding outstanding debt can be found in Note 7 on page 60 in Notes to the Financial Statements. * The Debt per Capita is shown in actual dollars and not in thousands. $ General Obligation Bond Debt Flood Control General Obligation Bond Debt 3.99% 4.36% 4.58% 4.09% 4.20% 4.48% 4.66% 3.78% 4.14% 4.14% Percent Net General Bond Debt to Assessed Value PIMA COUNTY, ARIZONA Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years ($ amounts in thousands) 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 Population at July 1 $ 182 204 223 206 223 252 278 238 283 331 Net General Bond Debt (per Capita*) Exhibit D-14 135 1,090,052 1,067,544 1,135,282 1,134,289 1,129,103 1,091,892 1,185,435 1,146,388 1,107,662 1,137,114 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 $ 3,852,574 4,000,624 4,236,070 4,491,395 4,835,561 5,221,271 5,620,156 6,050,950 6,869,955 8,220,396 Secondary Net Assessed Value Note: 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 Population at July 1 $ 1,289 1,250 1,301 1,274 1,243 1,179 1,256 1,192 1,103 1,108 Debt per Capita* Exhibit D-14a Overlapping governments are those that coincide (at least in part) with the geographic boundaries of the County. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Pima County. When considering the County's ability to issue and repay long-term debt, the process should recognize the entire debt burden borne by the residents and businesses therein. However, this does not imply that every taxpayer is a resident and is responsible for the repayment of debt of each overlapping government. 28.29% 26.68% 26.80% 25.25% 23.35% 20.91% 21.09% 18.95% 16.12% 13.83% Percentage of Assessed Value * The Debt per Capita is shown in actual dollars and not in thousands. $ Total Overlapping Debt Fiscal Year PIMA COUNTY, ARIZONA Ratio of Direct and Overlapping Debt to Property Values and Per Capita Last Ten Fiscal Years ($ amounts in thousands) PIMA COUNTY, ARIZONA Computation of Direct and Overlapping Governmental Activities Debt Outstanding At June 30, 2008 ($ amounts in thousands) Debt Outstanding Governmental Unit Debt repaid with property tax School Districts $ City of Tucson 503,280 Debt repaid with property tax Direct: Pima County * Amount Overlapping $ 283,301 Total overlapping $ 349,542 Flood Control District 503,280 283,301 $ 786,581 $ 349,542 725 Total direct Exhibit D-15 725 $ 350,267 $ 81,612 Other Debt: Certificates of participation Jail capital lease $ 81,612 22,957 22,957 266 266 Transportation bonds 149,801 149,801 Transportation loans 1,000 1,000 Other capital leases Total other debt $ 255,636 Total direct and overlapping debt $ 1,392,484 *Excludes improvement districts. Note: Overlapping governments are those that coincide with the geographic boundaries of the County. All overlapping governments are 100% within the County's boundaries. This schedule estimates the portion of the outstanding debt borne by the residents and businesses of Pima County. When considering the county's ability to issue and repay long-term debt, the process should recognize the entire debt burden borne by the residents and businesses therein. However, this does not imply that every taxpayer is a resident of each government and is responsible for the repayment of debt of each overlapping government. 136 137 25.35% 27.95% 432,358 $ $ 29.64% 447,079 188,331 (4,309) 192,640 635,410 4,236,070 2001 $ $ 26.45% 495,522 178,187 (4,883) 183,070 673,709 4,491,395 2002 $ $ See Notes to the Financial Statements (Note 7 page 68) for calculation of the legal debt margin for the current year. Note: General obligation debt may not exceed six percent of the value of the County's taxable property as of the latest assessment. However, Pima County received voter approval to increase the debt limit to fifteen percent of the value of taxable property. Amount reserved for payment of principal is the reserved fund balance of the Debt Service Fund. Total net debt applicable to the limit as a percentage of debt limit. 431,418 Legal debt margin 167,736 (6,249) (6,827) 600,094 4,000,624 173,985 $ $ 2000 153,295 577,886 3,852,574 146,468 $ $ Total net debt applicable to the limit General obligation bonds Less: Net assets reserved for repayment of general obligation debt Debt applicable to limit: Debt limit (15% of assessed value) Legal Debt Margin Assessed Value 1999 27.30% 527,285 198,049 (2,226) 200,275 725,334 4,835,561 2003 PIMA COUNTY, ARIZONA Legal Debt Margin Last Ten Fiscal Years ($ amounts in thousands) $ $ 29.30% 553,734 229,457 (2,648) 232,105 783,191 5,221,271 2004 $ $ 30.65% 584,652 258,371 (8,899) 267,270 843,023 5,620,156 2005 $ $ 24.87% 681,904 225,739 (5,571) 231,310 907,643 6,050,950 2006 $ $ 27.38% 748,334 282,159 (7,431) 289,590 1,030,493 6,869,955 2007 $ $ 27.42% 894,965 338,094 (10,241) 348,335 1,233,059 8,220,396 2008 Exhibit D-16 138 49,979 56,589 58,647 59,021 66,756 78,393 88,768 104,494 100,540 105,871 $ 31,114 34,742 36,438 39,183 46,378 44,704 47,037 56,902 67,662 75,834 Less: Operating Expense (3) $ 18,865 21,847 22,209 19,838 20,378 33,689 41,731 47,592 32,878 30,037 Available Net Revenue $ 4,727 5,006 6,611 8,887 9,235 9,656 9,501 11,073 13,072 13,825 Principal $ 5,031 4,650 4,783 5,704 5,666 5,990 5,706 5,350 6,976 9,598 Interest Debt Service (1) Debt Service Requirements include principal and interest payable in the 12 months following each fiscal year. Includes sewer connection fees. Excludes depreciation, interest expense and amortization. Sewer revenue debt rate covenants require minimum coverage of 1.20. $ Sewer User Revenues (2) Note: Details regarding outstanding debt can be found begininng on page 60 in Notes to Financial Statements. (1) (2) (3) (4) 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Fiscal Year PIMA COUNTY, ARIZONA Regional Wastewater Reclamation Department Pledged Sewer Revenue Debt Coverage Last Ten Fiscal Years (amounts in thousands) Coverage Ratio (4) 1.93 2.26 1.95 1.36 1.37 2.15 2.74 2.90 1.64 1.28 Exhibit D-17a 139 $ 42,017 52,345 53,264 50,599 51,852 55,777 57,819 61,944 64,781 65,009 Transportation Revenue $ 27,173 31,714 31,006 34,855 34,059 36,865 38,349 39,336 42,639 43,490 Less: Operating Expense $ 14,844 20,631 22,258 15,744 17,793 18,912 19,470 22,608 22,142 21,519 Available Net Revenue $ 4,000 4,000 4,000 8,535 10,215 8,905 10,710 11,435 11,745 12,365 $ * Debt Service Requirements include principal and interest payable in the 12 months following each fiscal year. 1,644 1,444 1,244 3,370 4,394 3,965 6,058 5,257 5,659 6,147 Debt Service * Principal Interest Note: Details regarding the County's outstanding debt can be found in Notes to Financial Statements. Operating expenditures do not include interest, depreciation or amortization. 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Fiscal Year PIMA COUNTY, ARIZONA Pledged Revenue Bond Coverage - Transportation Revenue Bonds Last Ten Fiscal Years (amounts in thousands) 2.63 3.79 4.24 1.32 1.22 1.47 1.16 1.35 1.27 1.16 Coverage Ratio Exhibit D-17b 140 * * * * $ Lease Revenue 6 6 6 2 1 0 $ 7 7 7 7 7 27 Less: Operating Expense * This debt was satisfied in full during FY 2003-04. 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Fiscal Year $ (1) (1) (1) (5) (6) (27) Available Net Revenue $ 125 130 140 145 155 460 $ Debt Service Principal Interest PIMA COUNTY, ARIZONA Pledged Revenue Bond Coverage - Lease Revenue Bonds Last Ten Fiscal Years (amounts in thousands) 75 68 61 52 31 99 (0.01) (0.01) (0.00) (0.03) (0.03) (0.05) Coverage Ratio Exhibit D-17c PIMA COUNTY, ARIZONA Lease, Lease-Purchase and Purchase Agreements Scheduled Payments (amounts in thousands) Function/Department Clerk of Superior Court Jail * Juvenile Court Public Works Building Sheriff FY 03-04 $ $ FY 04-05 195 3,824 74 1,643 42 $ 5,778 $ FY 05-06 147 2,764 $ 42 2,953 31 3,042 3,115 * Funds derived from a sale/leaseback of the County's Adult Corrections Facility provided funding for construction of Kino Veteran's Memorial Sportspark & Tucson Electric Park Stadium. Source: Pima County Finance and Risk Management Department 141 FY 06-07 $ 42 $ Exhibit D-18 82 3,015 FY 07-08 FY 08-09 $ 82 5,920 $ 131 3,027 $ 6,002 $ 3,158 21 $ 3,118 PIMA COUNTY, ARIZONA Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures Last Ten Fiscal Years (amounts in thousands) Fiscal Year 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Principal $ 39,118 34,803 36,873 35,358 43,648 46,998 41,255 48,672 50,940 56,459 Total Debt Service Interest $ 12,809 12,122 13,173 12,366 13,904 13,702 14,794 18,147 17,672 19,757 $ 51,927 46,925 50,046 47,724 57,552 60,700 56,049 66,819 68,612 76,216 Total General Expenditures * $ Exhibit D-19 Ratio of Debt Service To General Expenditures 425,140 442,415 467,614 487,476 515,774 546,136 589,708 640,336 689,968 755,413 * Includes General, Special Revenue and Debt Service Funds, while excluding Capital Projects Fund. 142 12.2% 10.6% 10.7% 9.8% 11.2% 11.1% 9.5% 10.4% 9.9% 10.1% STATISTICAL SECTION DEMOGRAPHIC AND ECONOMIC INFORMATION: The dual objectives of the demographic and economic information are to assist users in understanding certain aspects of the environment in which a government operates and to provide information that facilitates the comparisons of financial statement data over time and across governments. Information of this type can help readers assess a government’s condition by providing information about community expansion, average age increases or decreases and changes in personal income and unemployment. This type of data is important to readers in assessing economic condition. PIMA COUNTY, ARIZONA Demographic and Economic Statistics Last Ten Years Calendar Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Population (a) 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 Personal Income (b) $ 18,999,743 20,855,000 21,827,000 21,991,000 22,973,000 23,965,000 26,302,000 28,421,000 30,899,000 33,009,000 Per Capita Personal Income $ 22,464 24,057 24,698 24,787 25,395 25,797 27,599 28,894 30,813 32,470 Exhibit D-20 Unemployment Rate (a) 2.7% 2.6% 2.8% 4.7% 4.8% 3.5% 4.1% 4.4% 3.3% 4.7% Note : a) Population and unemployment data are obtained from projections supplied by the Arizona Department of Economic Security Statistics Unit. b) Personal income is obtained from "Arizona's Economy" magazine. 143 144 7,028 Pima County Government 75,847 440,254 17.1% 77,643 9 Note: Data is obtained from www.azstarnet.com/sn/star200, a website of the Arizona Daily Star. Total Work Force Total 3,596 1.2% Carondelet Health Network 9 3,275 Phelps Dodge 5,497 10 8 7 6 5 3 2 4 1 0.8% 1.4% 1.7% 2.1% 2.1% 2.6% 2.8% 2.5% 2.8% 4,200 6,058 7,119 9,102 8,796 9,978 11,032 10,149 11,376 Employees 9 8 7 5 6 4 2 3 1 Rank 2001 1.1% 1.5% 1.8% 2.3% 2.2% 2.5% 2.8% 2.6% 2.9% Percent of Total County Employment 394,100 19.7% 0.9% 81,139 3,329 10 393,200 20.5% 0.8% 81,076 3,783 3,800 5,933 7,175 8,278 9,200 9,932 11,606 10,400 10,969 Employees 10 9 8 7 6 5 4 1 3 2 Rank 2002 397,900 20.5% 1.0% 1.0% 1.5% 1.8% 2.1% 2.3% 2.5% 2.9% 2.6% 2.8% Percent of Total County Employment 6,168 7,135 8,234 9,947 9,732 11,335 10,100 11,580 Employees 81,606 3,375 5,494 6,832 8,239 8,346 10,071 10,850 9,800 11,140 Rank Percent of Total County Employment Tohono O'odam Nation 0.7% 1.2% 1.6% 1.9% 1.9% 2.2% 2.4% 1.7% 2.3% Employees 2000 4,000 10 8 7 5 4 3 1 6 2 Percent of Total County Employment Wal-Mart Stores, Inc. 3,060 8,187 Tucson Unified School District T M C HealthCare Inc. 8,352 Davis-Monthan AFB 5,497 9,694 State of Arizona City of Tucson 10,520 7,700 10,312 University of Arizona Raytheon Fort Huachuca Employer Employees Rank 1999 PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 10 9 8 7 6 4 5 2 3 1 Rank 2003 (continued) 424,400 19.2% 0.8% 0.9% 1.5% 1.7% 1.9% 2.3% 2.3% 2.7% 2.4% 2.7% Percent of Total County Employment Exhibit D-21 145 Employer 6,987 Pima County Government 77,740 Total 10 431,400 18.1% 0.8% 1.0% 81,678 4,500 4,595 10 9 8 Note: Data is obtained from www.azstarnet.com/sn/star200, a website of the Arizona Daily Star. Total Work Force 3,515 Tohono O'odam Nation Phelps Dodge 9 6,757 1 7 5 6 2 4 3 443,100 18.3% 1.0% 1.0% 1.5% 2.8% 1.5% 2.0% 1.7% 2.3% 2.2% 2.3% 80,908 4,123 4,980 5,306 13,098 6,765 8,233 7,623 10,282 9,742 10,756 Employees 10 9 8 1 7 5 6 3 4 2 Rank 2006 443,300 18.2% 0.9% 1.1% 1.2% 3.0% 1.5% 1.9% 1.7% 2.3% 2.2% 2.4% Percent of Total County Employment 79,899 4,900 5,625 5,848 9,119 7,290 8,233 7,419 10,354 9,927 11,184 Employees 10 9 8 4 7 5 6 2 3 1 Rank 2007 453,500 17.6% 1.1% 1.2% 1.3% 2.0% 1.6% 1.8% 1.6% 2.3% 2.2% 2.5% Percent of Total County Employment 5,848 6,701 6,954 7,701 8,018 10,535 10,754 12,515 Employees 80,671 5,805 4,420 1.3% 12,250 6,767 8,727 7,684 10,348 9,750 10,300 Rank Percent of Total County Employment Wal-Mart Stores, Inc. 8 2.8% 1.6% 1.8% 1.8% 2.3% 2.3% 2.4% Employees 2005 5,840 5,495 1 7 5 6 3 4 2 Percent of Total County Employment Freeport-McMoran Copper City of Tucson 11,939 7,692 Davis-Monthan AFB 10,078 9,753 10,171 7,690 Fort Huachuca 2004 Employees Rank Tucson Unified School District University of Arizona State of Arizona Raytheon (continued) PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 10 9 8 7 6 5 4 3 2 1 Rank 2008 459,200 17.6% 1.3% 1.3% 1.3% 1.5% 1.5% 1.7% 1.7% 2.3% 2.3% 2.7% Percent of Total County Employment Exhibit D-21 146 2,000 1,800 1,800 1,500 1,400 1,200 1,500 1,700 1,900 2,100 21,600 22,100 21,600 21,800 23,700 24,000 26,600 28,500 28,100 23,600 29,600 33,500 34,000 32,300 29,100 28,500 28,600 29,300 29,000 26,900 Manufacturing 182,600 191,600 190,800 184,500 184,500 185,000 199,300 219,200 228,600 221,600 13,400 13,800 14,100 15,100 14,800 15,600 18,200 17,500 17,800 16,300 Finance, Insurance and Real Estate Beginning with the July, 2003 issue, "Arizona's Economy" stopped using the Standard Industrial Classification System reporting format (SICS) and began using the North American Industrial Classification System reporting format (NAICS). 2.7% 2.6% 2.8% 4.7% 4.8% 3.5% 4.1% 4.4% 3.3% 4.7% Construction Trades and Services Note: 440,254 394,100 393,200 397,900 424,400 431,400 443,100 443,300 453,500 459,200 Mining EMPLOYMENT Arizona Department of Economic Security, Economic Forecasting Project University of Arizona, "Arizona's Economy" U of A Business Research Program 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 Population Total Unemployment Rate Exhibit D-22 Sources: 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Calendar Year Civilian Labor Force PIMA COUNTY, ARIZONA Population and Employment Last Ten Calendar Years 147 Sources: 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Calendar Year 3,497,788 3,526,164 3,733,205 3,459,183 3,522,401 3,611,696 3,928,773 4,251,710 4,284,880 4,474,352 15,279,274 15,334,429 14,513,188 13,628,899 15,016,131 15,393,817 15,847,429 17,179,275 17,857,865 19,491,376 Transportation No. of Air Bus Passengers Ridership 1.90 1.90 1.87 1.80 1.91 1.96 2.00 2.18 2.21 2.27 Riders Per Mile 2,508 2,453 3,182 3,367 9,441 10,432 12,103 11,903 6,265 4,171 Residential Bldg Permits 10,627 11,127 11,229 11,860 12,933 15,054 17,039 16,630 13,821 10,718 Real Estate Multiple Listings University of Arizona, "Arizona's Economy" U of A Business Research Program, Eller Business Review (EBR), College of Business & Public Administration Pima Association of Governments, Tucson Association of Realtors, Multiple Listing Service, Inc. 284,149 262,845 260,258 259,794 271,802 239,966 261,037 289,440 263,910 240,329 Aircraft Movements PIMA COUNTY, ARIZONA Transportation and Real Estate Last Ten Calendar Years $ 1,517,076 1,667,928 1,775,178 1,955,348 2,271,131 2,899,012 3,908,054 4,462,020 3,757,536 2,810,383 Sales Volume In $ 000's Exhibit D-23 PIMA COUNTY, ARIZONA Economic Indicators by Calendar Year Last Ten Calendar Years ($ amounts in thousands) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Construction Activity No. of Dwelling Construction Units Awards Awarded Aggregate Retail Sales Calendar Year $ 7,807,773 8,170,826 8,632,021 8,728,079 8,804,946 9,550,501 10,366,181 11,478,781 11,829,081 11,922,231 Exhibit D-24 $ 1,041,542 1,561,110 1,536,760 1,678,354 8,806 8,489 7,694 7,716 8,015 9,281 12,640 10,313 6,110 3,728 Bank Deposits $ 5,737,000 5,619,000 5,664,000 6,554,000 7,175,000 7,895,000 9,013,000 10,134,000 10,497,000 10,765,000 Source: University of Arizona "Arizona's Economy" U of A Business Research Program, Eller Business Review (EBR), College of Business & Public Administration 148 PIMA COUNTY, ARIZONA Population Statistics June 30, 2008 Age Group Population 0-4 5-9 10-14 15-19 20-24 25-39 40-54 55-59 60-64 65-69 70-74 75+ 68,381 66,432 61,950 66,940 74,033 212,151 205,057 63,073 53,603 42,225 34,778 77,883 Total 1,026,506 POPULATION PROJECTIONS Year Projected Population 2008 2010 2015 2020 2040 2050 1,026,506 1,070,723 1,175,967 1,271,912 1,585,983 1,709,026 Source: Arizona Department of Economic Security 149 Exhibit D-25 PIMA COUNTY, ARIZONA Average Annual Jail Population Last Ten Calendar Years Calendar Year Average Jail Population 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1,362 1,339 1,330 1,481 1,462 1,539 1,739 2,009 2,028 2,008 Source: Pima County Sheriff's Department 150 Exhibit D-26 STATISTICAL SECTION OPERATING INFORMATION: The objective of the operating information is to provide contextual information about a government’s operations and resources to assist users in using financial information to understand and assess a government’s economic condition. Two types of information are considered important. 1. Basic information about infrastructure assets, utilities and public works; in essence, the capital resources at the government’s disposal. Examples include miles of streets and sewers and wastewater treatment volume. 2. Descriptive service information, which would help to evaluate the size of the government. This would include types of services, the related demand and volume, and the non-financial resources employed to provide the services. PIMA COUNTY, ARIZONA Employees by Function Last Six Fiscal Years 2003 2004 Exhibit D-27 Full-time employees (FTEs) as of 6/30: 2005 2006 2007 2008 Function/Program Governmental activities General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity 1,851 1,986 290 0 407 174 180 140 2,040 1,902 288 0 413 185 197 117 2,952 1,434 351 0 408 20 164 250 2,911 1,401 526 45 414 23 180 289 2,776 1,442 334 41 408 22 466 179 2,860 1,560 330 40 404 26 485 186 Total governmental activities 5,028 5,142 5,579 5,789 5,668 5,891 506 43 607 511 141 3 481 42 548 162 149 3 449 42 0 631 116 3 668 0 0 634 156 3 472 0 0 559 153 3 508 0 0 563 128 3 Total business-type activities 1,811 1,385 1,241 1,461 1,187 1,202 Total 6,839 6,527 6,820 7,250 6,855 7,093 Business-type activities Regional Wastewater Reclamation Department * Wastewater Management-Solid Waste Kino Hospital Pima Health System & Services Development Services Parking Garages Note: Internal service funds FTEs were added to the General Government function. Internal service fund employees contribute through their labors to Pima County funds. Variances can be noted in the Governmental Activities categories due to a change in classification criteria in fiscal year 2005. Variances can be noted in the Governmental Activities categories due to employees being added to the Library District from the City of Tucson on July 1, 2006. Variances can also be noted in the Business Activities categories due to the closure of Kino Hospital which resulted in the absorption of some Kino employees into Pima Health System & Services. In fiscal year 2005 - 2006 Wastewater Management -solid was classified as a governmental fund . It now appears under the category "Sanitation". * Previously known as Wastewater Management - Liquid Waste. 151 PIMA COUNTY, ARIZONA Operating Indicators by Program Last Six Fiscal Years 2003 2004 Exhibit D-28 Fiscal Year 2005 2006 2007 2008 Program: Sheriff Physical arrests 32,159 33,815 32,501 30,686 33,929 32,796 3,920 3,813 4,148 3,170 3,927 5,967 42,074 36,823 37,868 27,846 30,204 41,542 45,994 40,636 42,016 31,016 34,131 47,509 64.5 8,289 65.0 9,718 65.5 11,245 66.4 8,325 68.5 8,734 67.3 4,452 Cultural and Recreational Spring training attendance Sidewinders attendance 137,302 167,552 147,117 165,387 146,739 165,441 155,377 171,179 142,773 153,595 160,626 143,611 Parks & Recreation Athletic field permits issued Community center admissions Volunteer hours 101 280,850 23,070 107 344,470 22,465 129 388,092 23,785 135 391,295 17,218 141 438,051 25,700 147 445,137 19,622 1,300,000 5,761,423 458,736 1,338,000 6,063,771 486,402 1,430,690 6,249,123 474,045 1,390,792 6,276,794 488,250 1,395,849 6,371,480 492,973 1,429,365 6,874,888 554,339 $ 12,908,101 9,356,754 2,598,134 72,540,294 $ 20,698,771 18,609,343 5,592,348 67,890,856 $ 42,755,555 42,916,920 5,071,608 7,476,315 $ 16,646,964 2,018,849 3,568,917 76,950,908 $ 37,402,683 66,095,100 21,944,399 29,146,482 $ 18,619,333 17,591,833 4,673,301 72,925,857 $ 97,403,283 $ 112,791,318 $ 98,220,398 $ 99,185,638 $ 154,588,664 $ 113,810,324 Traffic violations/citations Criminal Total Civil Total Total violations/citations Wastewater Avg. daily sewage treated (MGD) New connections Library Volumes in collection Total volumes borrowed Number of cardholders Capital projects completed Land Buildings Improvements Infrastructure 152 PIMA COUNTY, ARIZONA Capital Assets and Infrastructure by Program Last Six Fiscal Years Exhibit D-29 2003 2004 Fiscal Year 2005 2006 2007 2008 6 5 252 6 5 280 6 5 276 6 5 303 7 4 302 7 4 324 1,750 691,236 1,773 $ 672,427 1,782 $ 926,828 1,798 $ 964,051 1,801 $ 1,150,950 1,893 $ 1,321,034 138 10,219 138 10,313 138 10,558 138 10,622 139 10,840 140 10,999 Parks & Recreation Urban parks (acres) Playgrounds (1) Baseball/softball diamonds Soccer/football fields Community centers Swimming pools 2,366 30 64 12 8 7 2,411 32 67 12 9 8 2,419 34 73 14 9 8 2,885 36 78 14 9 9 2,932 41 84 16 9 9 2,991 41 90 17 11 9 Wastewater Sanitary sewers (miles) Treatment capacity (MGD) 3,049 74.76 3,177 74.76 3,249 81.50 3,314 87.45 3,464 92.45 3,492 90.00 12 12 12 12 12 12 12 13 25 26 2 606 7,437 18 7 10,334 17,771 25 7 13,942 31,713 32 17 1,235 32,948 49 18 3,668 36,616 67 9 757 37,373 76 Program: Sheriff Stations Zone offices Patrol Units Transportation (streets and highways) Streets (miles) Pothole repair Flood Control Bank protection (miles) Flood plain / drainageway (acres) Libraries County (2) City Open Space Acquisitions Properties added Acres Cumulative acreage Total properties $ (1) 2005 Baseball/softball diamonds adjusted after department review (2) On July 1, 2006, the Pima County Library District assumed control of the operations of the libraries. 153 (This page is intentionally blank) 154